Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

ELDER YARD CHAPEL CHESTERFIELD BILL [Lords]

Read the Third time and passed, with an Amendment.

BEDFORD CORPORATION BILL

CROYDON CORPORATION BILL

SCOTTISH UNION AND NATIONAL INSURANCE COMPANY BILL

As amended, considered; to be read the Third time.

Oral Answers to Questions — MINISTRY OF SUPPLY

Army Fordson Trucks (Sale)

Mr. Fernyhough: asked the Minister of Supply if he will institute an inquiry into a recent sale of Army Fordson trucks, some of which were almost new and yet were sold in lots of ten at £17 10s. each.

The Minister of Supply (Mr. Reginald Maudling): These trucks were all at least ten years old, and for the reasons I gave in my reply of 16th April to the hon. Member for Lichfield and Tamworth (Mr. Snow), they are not an economical proposition for ordinary purposes. That was, no doubt, reflected in the prices bid for them. I should like to take this opportunity of correcting a mistake in that reply, for which I apologise. Most of the trucks weighed 2 tons and carry a £25 tax; only a few of them were 3½ tons and taxed at £35.

Mr. Fernyhough: Is not the right hon. Gentleman aware that there is growing public concern and apprehension at this constant wicked waste? How does he think the Chancellor of the Exchequer is

going to save £100 million so long as affairs like this are permitted? Can he say whether any more vehicles of a similar kind are on order? If he does not know what to do with them, instead of disposing of them at give-away prices, could he not find some use for them in some of the Colonial Territories which need some vehicles of this kind?

Mr. Maudling: I have yet to hear of a better way of disposing of surplus Government property than by open public auction.

Mr. G. Brown: But surely not selling them at £17 10s. per vehicle. Tremendous profit is going to be made by somebody out of this. Is the right hon. Gentleman not aware that this is a fantastic situation—there is no party issue involved—in which large quantities of stock are ordered at public expense and subsequently sold not even at knock-down value? Will he not set up an inquiry, public or private as he chooses, into what is going on here?

Mr. Maudling: As I have explained, these trucks are at least ten years old. If the right hon. Gentleman can suggest to me a better way of getting a higher price, I shall be glad if he will do so.

Mr. Brown: Yes, indeed, since the Minister wants to know. Break them down and sell the spares. He will then get a lot more than £17 10s. per vehicle.

Ordnance Factory, Dalmuir

Mr. Bence: asked the Minister of Supply what steps he is taking to ensure continuity of employment at the Royal Ordnance Factory, Dalmuir.

Mr. Maudling: I have nothing to add to the reply which I gave to the hon. Member's Question on 15th March.

Mr. Bence: Could the right hon. Gentleman let us have some definite answer on the position of the Royal Ordnance Factory at Dalmuir, as the situation at present is causing a great deal of unrest and discontent in the district? Can he not give us an assurance that there will be employment at that Royal Ordnance Factory under the Ministry of Supply for at least the next five years?

Mr. Maudling: I wish I could give more information, but I think the hon. Member must realise that future prospects of


employment on manufacturing tanks, for example, depend very much on export orders about which we cannot be certain until we get them.

Mr. Steele: But surely the right hon. Gentleman is aware that the general impression in Dalmuir and district is that the Ministry wants to close down this factory, without considering other factories engaged on Government work. Could he say something about the Ministry's policy?

Mr. Maudling: As I said in a previous answer to which I have referred, I do not at present foresee any need to discharge people during this year because there is enough work already on the books at Dalmuir to keep people employed until the end of the year. Beyond the end of the year I cannot foresee until I know the prospects for export orders.

Mr. Bence: In view of the ambiguous nature of the answer, I wish to give notice that I will take the first opportunity to raise this matter on the Adjournment.

Comet Aircraft

Mr. Hamilton: asked the Minister of Supply the total amount paid from public funds to the aircraft company which manufactured the Comet aircraft.

Mr. Maudling: I assume the Question relates to expenditure by my Department following the Comet accidents. I would refer the hon. Member to paragraphs 36 and 47 of the Comptroller and Auditor General's Report on the Civil Appropriation Accounts (Classes VI-X), 1954–55.

Mr. Hamilton: Has the Minister seen the accounts of the recent report for de Havilland in which the company indicates its record profits for the year 1955? In the words of the Sunday Express a week ago, suspicion is growing in the City that the Ministry of Supply has treated the company with remarkable generosity over the Comet affair. Will the Minister give an assurance that in the £100 million about which the Chancellor talks the Ministry of Supply will play its part by cutting down the extortionate profits made by these companies?

Mr. Maudling: I think the hon. Gentleman has failed to observe that the

de Havilland enterprise goes much further than the aircraft company, and in the matter of the dividends paid he should not assume that any of the money was contributed by the aircraft company. So far as Her Majesty's Government have bought products from the company, the prices of these are, in my opinion, both fair and reasonable.

Mr. Beswick: May I ask two questions? The first is that, according to a deputation of workers from the Cheshire factory which came here, work on the Comet II is held up and time is being wasted. Can the Minister say whether that is, in fact, the case? Secondly, can he say whether in addition to paying the company—according to the Comptroller and Auditor General—too high a price for the Comet II, there is a report that the company is asking for some compensation from the Ministry for the Comet IV because of the short production line that will apparently be entailed there? Can the Minister say whether there is any truth in that second suggestion?

Mr. Maudling: On the first point, I was not aware that anything was holding up production of the Comet II, but I will gladly look into it. On the second point, I do not see how any question of compensation for the Comet IV can arise.

Departmental Establishments (Nurses)

Major Anstruther-Gray: asked the Minister of Supply the policy of his Department with regard to the employment of male nurses.

Mr. Maudling: Nurses engaged at our establishments, all of which employ mixed staffs, have to be in a position to treat employees of either sex. Male nurses are not employed as there may be difficulties involved in their treating women patients without some other person present, which it is not always possible to arrange.

Major Anstruther-Gray: Is my right hon. Friend aware that the Society of Male Nurses feels that there has been discrimination against its members in this matter? Is he prepared to look into the matter again?

Mr. Maudling: Certainly. I understand that this is a fairly general practice, but I am not entirely satisfied that it is justified and I will gladly look at it again.

Questions to Ministers

Mrs. Braddock: On a point of order. Before you call the next Question, Mr. Speaker, would you give me a little assistance? Ministry of Supply Questions will not be answered orally for a little time and there is a lot of concern in the country about what happened to a certain Mr. Teakle, who was Deputy-Director of the Ministry of Supply when a lot of this surplus material was being disposed of. Can you assist me, Mr. Speaker, as to the method to be employed for having Questions asked and Answers given in this House about something which has become a national scandal?

Mr. Speaker: I know nothing about that. The hon. Lady has not given notice of the Question. She could always put down a Question for Written Answer at any time before the Minister's turn comes again.

Mr. Dodds: Further to that point of order. Could you give an opinion, Mr. Speaker, as to whether or not there is likely in the near future to be an Adjournment debate allocated to the question of Government surplus stocks?

Mr. Speaker: I could not say about that.

Air Commodore Harvey: Further to that point of order. Is it right, Mr. Speaker, for an hon. Member to put a question to you regarding an individual who is unable to defend himself, when the Minister concerned is not able to reply, which merely starts a hare and puts the individual himself in an impossible position?

Mr. Speaker: That is the responsibility of the hon. Member who asks the Question.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Frozen Milk

Mr. Dodds: asked the Minister of Agriculture, Fisheries and Food what developments have taken place resulting from the assignment of the patent rights of frozen milk to the National Research Development Corporation for the commercial explotation of the invention; and what advantages are derived by the process.

The Minister of Agriculture, Fisheries and Food (Mr. D. Heathcoat Amory): I understand that the National Research Development Corporation is receiving applications for licences to exploit the patent, has already granted one, and is prepared to consider the grant of further licences on a non-exclusive basis. Advantages of the process are that the product, which is indistinguishable from normal pasteurised milk, is easily transportable and can be supplied where fresh milk is not readily available.

Sausages (Meat Content)

Mr. Dodds: asked the Minister of Agriculture, Fisheries and Food what progress has been made in regard to the consideration given to the problem of the meat content of sausages.

Mr. Amory: I understand that the Food Standards Committee has nearly completed its review.

Foot-and-Mouth Disease

Mr. Crouch: asked the Minister of Agriculture, Fisheries and Food what is, as regards England and Wales, the number of cattle, including calves, sheep and pigs, that have been slaughtered in each of the last ten years under his Foot-and-Mouth Disease Regulations; the amount of compensation paid in each year; the value of each class of animal slaughtered in each of those years for human consumption; and the quantity of milk produced during each of the last ten years and its value each year.

Mr. Amory: With permission, I will circulate the figures in the OFFICIAL REPORT.

Following are the figures:


AGRICULTURAL OUTPUT (a)—ENGLAND AND WALES


Value at Current Prices (£'000) (June—May years)



1945–46
1946–47
1947–48
1948–49
1949–50
1950–51


Cattle (b):








Beef and Veal
…
…
42,616
46,306
47,728
54,571
58,365
71,590


Sheep (b):








Mutton and Lamb
…
16,944
18,830
19,216
22,871
24,886
26,196


Wool
…
…
…
2,680
2,816
2,329
3,381
4,072
4,225


Pigs (b):








Pigmeat
…
…
…
24,221
22,035
20,870
35,853
52,854
70,450





1951–52
1952–53
1953–54
1954–55
1955–56 (d)


Cattle (b):







Beef and Veal
…
…
83,386
84,117
99,477
142,517
(132,835)


Sheep (b):







Mutton and Lamb
…
29,460
35,245
37,750
43,442
(39,178)


Wool
…
…
…
12,846
10,135
10,252
11,184
(10,237)


Pigs (b):







Pigmeat
…
…
…
98,952
128,409
129,838
145,753
(131,175)




Quantity (million gallons) and Value (£'000)



1945–46
1946–47
1947–48
1948–49


Quantity
Value
Quantity
Value
Quantity
Value
Quantity
Value


Milk and Milk Products (c)
1,362
146,696
1,370
158,387
1,399
173,784
1,579
201,813





1949–50
1950–51
1951–52
1952–53


Quantity
Value
Quantity
Value
Quantity
Value
Quantity
Value


Milk and Milk Products (c)
1,659
227,767
1,664
236,439
1,659
249,050
1,681
262,451





1953–54
1954–55
1955–56 (d)


Quantity
Value
Quantity
Value
Quantity
Value


Milk and Milk Products (c)
1,785
281,442
1,769
275,662
(1,797)
(283,628)


(a) Value of output from agricultural holdings of over 1 acre. Excludes particularly output of pigmeat from gardens, pig clubs and other small producers on holdings of 1 acre or less.


(b) Value of output of livestock relates to the value of live beasts sold off farms.


(c) Excludes milk fed to livestock.


(d) Forecast.

Animals Slaughtered in England and Wales under the Foot-and-Mouth Disease Regulations and the amount of Compensation Paid


Year June—May
Cattle (including calves)
Sheep
Pigs
Compensation






£


1945–46
…
…
…
1,853
858
2,773
94,660


1946–47
…
…
…
5,977
1,836
3,231
307,586


1947–48
…
…
…
1,013
923
194
40,343


1948–49
…
…
…
1,613
769
555
91,677


1949–50
…
…
…
962
42
2,277
66,607


1950–51
…
…
…
1,035
507
474
57,813


1951–52
…
…
…
22,832
13,112
9,148
1,513,047


1952–53
…
…
…
7,916
11,580
3,290
616,352


1953–54
…
…
…
949
4,165
792
101,597


1954–55
…
…
…
297
433
221
27,852


Totals
…
…
44,447
34,225
22,955
2,917,534

Meat (Aureomycin)

Mr. Dodds: asked the Minister of Agriculture, Fisheries and Food for a statement giving details of the experiments taking place under the sponsorship of his Department in connection with the treatment of meat with the drug aureomycin.

Mr. Amory: No experiments on the treatment of meat with aureomycin are being sponsored by my Department. Research sponsored by a commercial firm is being conducted by the National College of Food Technology.

Mr. Dodds: Is not the right hon. Gentleman aware that a lot of things are being done these days by people who are concerned only with the making of profit? Will he not, in a matter of this sort take some interest and, if the practice is harmful to people, put a stop to it instead of waiting for years until complaints are made in this House about it?

Mr. Amory: As I think the hon. Gentleman knows, the sale of meat containing aureomycin is at present a breach of the Public Health (Preservatives, etc., in Food) Regulations. I think he is also aware that the use of antibiotics as preservatives is a matter which is going to be considered by the Preservatives Sub-Committee of the Food Standards Committee in the course of its review of the present Regulations.

Potatoes and Onions

Mrs. Mann: asked the Minister of Agriculture, Fisheries and Food the present wholesale price of potatoes and

onions per lb.; and if he will take steps to lower these prices.

Mr. Amory: The average wholesale prices of potatoes and onions are 4d. and 5d. per lb., respectively. I have already explained to the House why I do not intend to control prices of potatoes. The same arguments apply to onions. The wholesale and retail prices of onions which are all imported at this time of the year have fallen substantially during the past six weeks.

Mrs. Mann: Is the right hon. Gentleman aware that I paid 1s. 2d. a lb. for onions in my locality and that elsewhere in Scotland they were 1s. a lb.? Is he further aware that owing to the increase in the price of bread there is no alternative to potatoes for working-class people? Does the right hon. Gentleman understand that this is bound to lead to increased wage demands? Will he shake himself up and do something regarding the price of potatoes?

Mr. Amory: I do not know what the retail price of onions is in Scotland, but I would advise the hon. Lady to have a good look round down here in the South, because I am informed that onions are obtainable at about 7d. a lb. from leading retailers in London.

Potatoes

Miss Burton: asked the Minister of Agriculture, Fisheries and Food whether, in view of the high price now being charged for potatoes and the fact that greengrocers are complaining that their supplies contain much unsaleable


produce, he will reconsider his decision not to have an inquiry into the distribution of potatoes.

Mr. Amory: I do not consider that an inquiry into the distribution of potatoes is necessary. But officials of my Department have recently discussed the present potato situation with representatives of the national trade organisations representing wholesalers, retailers and fish fryers.

Miss Burton: Is the Minister aware that I have tried very hard to believe him when he said that he would make an inquiry into distribution if given the proof that that was necessary? Does he realise that small greengrocers are today being given quantities of bad potatoes on which they have to pay because the wholesalers are still not subject to the Weights and Measures Act? Does the right hon. Gentleman intend to do nothing about it at all?

Mr. Amory: I will look at the point which the hon. Lady has raised, but in reply to previous Questions of hers I have reminded her that the committee under the chairmanship of Lord Runciman, which covers all horticultural products, including potatoes, has not yet reported. I am certain that committee will have a great deal to say about the method of distribution of all horticultural products.

Miss Burton: asked the Minister of Agriculture, Fisheries and Food if he will make a further statement on the question of the supply of potatoes in the light of imports during the second and third weeks of April.

Mr. Amory: During the week ended 14th April it is estimated that imports of main-crop potatoes amounted to about 30,000 tons. Returns for the following week are not yet available, but they are probably larger still.

Miss Burton: Did the Minister listen to the broadcasts during the weekend? Is he aware how infuriating it is for consumers to be told that there will be plenty of potatoes at the end of May or the beginning of June? Is he further aware that the Marketing Board has said that there is no shortage of potatoes, and no reason for these high prices? Is he going to ignore all these facts?

Mr. Amory: I cannot accept the statement that the Marketing Board has literally said that, because the figures which it issued of estimated stocks on 1st March—which is the last date for which figures are available—show that there was a substantial fall as compared with the stocks at the same time last year. As I have said before, I believe that the supply position is bound to remain difficult for another six weeks, owing mainly to the light yield last year.

Mr. Champion: Is the Minister aware that the supply position has been made more difficult as a result of the banning of exports by Holland? This reduces the amount of potatoes available and will increase competition for those which are available, and prices will inevitably rise again as a result. Will not the Minister take some action in this matter?

Mr. Amory: I have been in touch with my opposite number—the Minister of Agriculture in Holland—in regard to this matter. I think that the action taken by Holland is due to the fact that potatoes are in very short supply on the Continent, just as they are here.

Mr. Nabarro: My right hon. Friend will be aware that substantial quantities of potatoes are available in Worcestershire. Will he give the House an assurance that all last season's crop has now been cleared from the farms?

Mr. Amory: I rather hope that they have not yet all been cleared from the farms. I am hoping that further supplies will be coming from our own clamps in this country to cover us during the next six weeks. I should be very grateful to my hon. Friend if he would spend all his spare time going round and seeing how many potatoes there are in Worcestershire and if, on each occasion when he returns to this House, he will make sure that he brings a few tons with him.

Mr. Collins: Is the Minister aware that no amount of spare-time searching will prove otherwise than that within two weeks there will be no old potatoes in the country? It will be the middle of next August before housewives are able to buy potatoes at less than 6d. per lb.

Mr. Amory: I think the hon. Member is turning himself into a bit of a prophet. I would certainly not risk going as far as that. I stand by the words I have used,


namely, that for the next six weeks I think that supplies will remain very difficult.

Mr. J. Griffiths: If that fact proves to be true and the prices go up, does the Minister intend to change his view about controlled prices?

Mr. Amory: It is very unlikely that I would change my view. If supplies get any shorter, it will be even more important that any potatoes which are available from any source should come into the market.

Mr. Griffiths: If advantage is taken of this scarcity and fabulous profits are made, does not the Minister realise that public interest will require him to take action to control prices?

Mr. Amory: I rather doubt whether it will in present circumstances, when the most important thing in the interests of consumers is to make sure that any potatoes which are available come into the market to satisfy present demand.

Viscount Hinchingbrooke: On a point of order. Reverting to the question which I put to you last week, Mr. Speaker, may I ask whether, as the Government are not involved in the purchase, distribution or sale of potatoes, this Question can be in order—since there is no administrative competence in the Ministry?

Mr. Speaker: The Minister has the statistics, and he has given them. He is quite entitled to do so.

Lieut.-Colonel Lipton: asked the Minister of Agriculture, Fisheries and Food how many weeks' supply of potatoes is now available in this country.

Mr. Amory: Any calculation of this kind would be unreliable because it would be subject to so many reservations about the weather, changes in the level of demand, the rate of importation, and other factors.

Lieut.-Colonel Lipton: Has not the public been given misleading figures about the potato stock position? Is the right hon. Gentleman taking the trouble to satisfy himself about the stocks and whether the position, compared with that of a year ago, justifies more than double the price being charged? Is the right hon. Gentleman not interested to that extent?

Mr. Amory: The latest available figures on the stock position have already been given in the stock statistics collected by the Potato Marketing Board as at 1st March.

Lieut.-Colonel Lipton: Two months ago!

Mr. Amory: I know of no more up-to-date statistics than those.

Mr. Collins: asked the Minister of Agriculture, Fisheries and Food what special steps he is taking to ensure that the supply of home-grown potatoes from the 1956 harvest will be sufficient to meet the demand.

Mr. Amory: Beyond the existing provision of a guaranteed support price for potatoes no special steps would be appropriate.

Mr. Collins: Will not the right hon. Gentleman return to the former practice of planning for a supply sufficient for domestic requirements under adverse crop conditions and, then, in a good growing year, using the surplus as stock feed? Would not this be in the interest of farmers and consumers?

Mr. Amory: The hon. Gentleman is suggesting exactly our objective, which is that in years of normal yield supplies shall be adequate to meet demand at reasonable prices.

Sir A. Gomme-Duncan: Would not my right hon. Friend agree that if potatoes do not grow in this country or in any other country not even a Tory Government can produce them?

Mr. Amory: In general, I would not wish to dissent from what my hon. and gallant Friend has said. There are very few things that a Tory Government cannot do.

Mr. Collins: asked the Minister of Agriculture, Fisheries and Food what representations he has made to the Potato Marketing Board with regard to the high prices now being charged by the Board for ware potatoes.

Mr. Amory: The Potato Marketing Board has sold no potatoes on the ware market this season.

Mr. Collins: Is the right hon. Gentleman aware that the current wholesale price of 42s. per cwt. compares with 17s.


at this time last year, an increase of 150 per cent., against a 15 per cent. decrease in the crop? Does he not regard it as an exorbitant increase and as evidence of how utterly the plans of himself and of the Potato Marketing Board have failed? Since normal supply and demand have broken down, will he not go back to maximum-price control?

Mr. Amory: I have already answered both those questions.

Ditching Machines

Mr. Vane: asked the Minister of Agriculture, Fisheries and Food whether he is aware of the prohibitive expense of maintaining farm and woodland ditches by hand labour only; and what assistance he has given to the manufacturers of agricultural machinery to design a practical machine which can be driven by a normal tractor to lighten this work.

Mr. Amory: I fully appreciate the need to encourage the further development of suitable machines for the maintenance of farm and woodland ditches. My engineers have given advice to manufacturers, and I am informed that a number of machines, in various stages of development, show considerable promise.

Mr. Vane: Will my right hon. Friend do what he can to encourage this work, because this is an extremely important gap in the whole range of agricultural and woodland machinery?

Mr. Amory: I entirely agree with what my hon. Friend has said. I think he will agree that the designing of a suitable machine is particularly difficult in the case of the hedge type of ditch, but my own engineers have prepared two prototype machines which are now under development, and the manufacturers have other prototypes under development. I hope very much that one or other will turn out to be a success.

Milk (Quality)

Mr. Vane: asked the Minister of Agriculture, Fisheries and Food what communications he has had with the Milk Marketing Board about introducing a system of payment for milk according to quality in place of the present basis.

Mr. Amory: None, Sir. The Milk Marketing Board is responsible for pay-

ments to producers, and a special committee of the Board has been set up to consider the problem.

Mr. Vane: Will my right hon. Friend do what he can to encourage the payment for milk on a quality basis? Surely it is quality and not quantity which is now important in milk production. I believe that the Scottish Board has some such plan in operation and has found that it works satisfactorily. What the Scottish Board can do surely we can do better?

Mr. Amory: I should certainly not wish to dissent from the last part of the question, but I am sure my hon. Friend will agree that the whole matter is very complicated, particularly when so much of our market is for milk in liquid form. I shall look forward very much to the report which the committee of the Board no doubt will be making in due course.

Foreign Fishing Vessels (Prosecutions)

Mr. Edward Evans: asked the Minister of Agriculture, Fisheries and Food the number of foreign fishing vessels whose owners or officers have been brought before British courts in respect of the agreements made in connection with the findings and agreements on over-fishing in adjacent waters of the British Isles during the past five years.

Mr. Amory: My Department has no power to institute proceedings against foreign vessels for using nets below the minimum mesh sizes prescribed under the International Fisheries Convention of 1946, nor for landing undersized fish except within the United Kingdom. Three convictions have been obtained in the past five years against foreign vessels landing undersized fish in the United Kingdom.

Mr. Evans: Do not those figures indicate that the fines we impose upon foreigners who disregard our regulations bear no comparison with those imposed upon British vessels who infringe foreign regulations? Will the Minister bring our regulations up to date in order to conform with the swingeing fines and penalties imposed on our vessels when they infringe the regulations of foreign Powers?

Mr. Amory: I agree that the hon. Member's point is an important one, but


I do not think it arises out of this Question. The question which the hon. Member now asks arises out of the infringement of fishing rights in restricted waters, which is not covered either by the Question or the answer here.

Food Prices

Miss Burton: asked the Minister of Agriculture, Fisheries and Food whether he is aware that food prices rose by about 7½ per cent. between the middle of December, 1954, and the middle of December, 1955; and if he will give the percentage increase or decrease from the middle of December, 1955, to the latest possible date in the price of those foods which he controls.

Mr. Amory: Yes, Sir. Bread and milk are now the only foods whose prices I control. Since December, the price of National bread has risen by 13 per cent. as a result of reduction in the subsidy on 26th February. The price of ordinary milk has not changed.

Miss Burton: As a past Minister of Pensions, will the Minister draw the attention of the other Members of the Cabinet to the cartoon in today's Daily Mirror concerning the plight of old-age pensioners and persuade the Cabinet to do something about it?

Mr. Amory: I think that the improvements made in the lot of old-age pensioners recently have been of very great assistance and have put the old-age pensioner into the most favourable position he or she has been in for many years.

Beef and Veal

Mr. Dye: asked the Minister of Agriculture, Fisheries and Food what quantity of beef was imported into Great Britain during the months of January, February and March, 1956; and what were the comparative figures for the first three months of 1955.

Mr. Amory: Imports into the United Kingdom of beef and veal as carcase meat during the first three months of 1956 were 48·4, 31·9 and 42·7 thousand tons. The comparative figures for 1955 were 30·6, 38·6 and 28·5 thousand tons, respectively.

Mr. Dye: In view of the increases for this year, does not the right hon. Gentleman think that it would have been fair

to have warned the home producers of these increased imports, so that they could have taken steps to market their own produce in a better manner than has been the case?

Mr. Amory: No—the increase has not been a sudden or unexpected one. It has arisen partly from a steady increase in the amount of chilled meat now coming into the country. That has happened gradually and steadily over the past twelve or eighteen months. I do not think there is anything unexpected in the present situation, and it is to be welcomed inasmuch as it brings our consumption of meat nearer to what it was pre-war. It is still below.

Air Commodore Harvey: I welcome the additional supplies of beef, but is it the intention of the Government to import large quantities of Argentine beef when that country has taken so few of our manufactured products?

Mr. Amory: As my hon. and gallant Friend knows, the Government do not buy meat now, and there are no obstructions to free trading.

Fat Cattle

Mr. Dye: asked the Minister of Agriculture, Fisheries and Food how many fat cattle were received for grading and slaughter during the first quarter of 1956; and what were the comparative figures for the first quarter of 1955.

Mr. Amory: 255,549 cattle were certified at livestock and deadweight centres for slaughter during January-March, 1956, compared with 295,916 in January-March, 1955. I have no information as to how many cattle did not go through the certification procedure.

Mr. Dye: asked the Minister of Agriculture, Fisheries and Food the average price per live hundredweight at which fat cattle graded for slaughter were sold in the auction markets during January, February and March, 1956; and similar figures for 1955.

Mr. Amory: The average market price for fat cattle certified at auction sales during January-March, 1956, was 132s. 11d. per live hundredweight compared with 158s. 4d. in the corresponding period for 1955.

Mr. Dye: In view of this drop in the price of home-produced fat cattle, does the right hon. Gentleman still think that home producers have ample facilities for learning how much imported beef is coming in and are thus able to market their produce to the best advantage?

Mr. Amory: I think very few people know—it is only a guess—just how much meat is going to come in under free market conditions. Producers have good scope for understanding the trend of the market, which has been steadily upwards.

Mr. Champion: Has the fall in wholesale prices been reflected in the retail prices?

Mr. Amory: There has been some levelling out. When the wholesale price went up to its peak about a year ago, retail prices did not reflect entirely the whole of that rise. Now there has been some fall in wholesale prices, but the level of retail prices has not entirely reflected it.

Mr. Studholme: What was the average support price last year and at the beginning of this year?

Mr. Amory: The guaranteed price for beef increased in the last Price Review by 12s. 4d. per cwt.

Mr. J. Griffiths: The right hon. Gentleman said he would not take action to prevent prices increasing. Are we now to understand that he will not take any action to ensure that a fall in wholesale prices is reflected in the retail prices?

Mr. Amory: No, Sir. I have no intention of taking action in the sense of price control to effect that. Intervention on my part could not be helpful. We must rely on the force of competition to see that, in the long run, prices come down.

Annual Price Review

Air Commodore Harvey: asked the Minister of Agriculture, Fisheries and Food if he will adjust the Annual Price Review to a review every three years.

Mr. Amory: To depart from the present practice of holding a review every year would require amendment of the Agriculture Act, 1947. As foreshadowed in paragraph 36 of the White Paper on the 1956 Annual Review, the Govern-

ment are considering whether any practicable methods can be devised of providing longer-term assurances of support for the industry than are possible under present arrangements.

Air Commodore Harvey: Is my right hon. Friend aware of the considerable dissatisfaction among the smaller dairy farmers, particularly in Cheshire, not so much at the amount as at the allocation of the subsidy? Is not the Act of 1947, as now framed, loaded in favour of the large farmer? Would he review as a matter of great urgency the whole Act of 1947, which is now nine years old, to help 80 per cent. of the country's farmers, the small farmers, and give them a reasonable chance to compete against the big men?

Mr. Amory: I will take into consideration everything that my hon. and gallant Friend has said, with which I agree. I would remind him that the dominating difficulty this year was that until the consumption of liquid milk could be increased we just dared not increase the incentive for the production of milk.

Mr. J. Johnson: asked the Minister of Agriculture, Fisheries and Food if he is aware of the increasing anxiety amongst the agricultural community of Warwickshire, particularly the small farmers, since the publication of the Annual Price Review; and what action he is taking about this.

Mr. Amory: I am aware that the Warwickshire County Branch of the National Farmers' Union has passed a resolution critical of the Government's agricultural policy. As I have already informed the House, the Government are satisfied that their determinations following the Annual Review were fair and just to the industry and to the nation. They are also satisfied that these determinations were as fair to the small farmer as to the large.

Mr. Johnson: Is not the right hon. Gentleman aware that they not only passed a vote of censure, but also moved that he be replaced by his hon. Friend the Member for East Aberdeenshire (Sir R. Boothby)? Is he further aware that this conference asked the Prime Minister to go to Leamington to speak to them on the matter? Does not this shake him out of his complacency? Does he never lose


any sleep at night thinking about this matter?

Mr. Amory: I was aware of the constructive suggestions made by the National Farmers' Union to which the hon. Member refers, but I cannot report to date that I have lost either sleep or appetite?

Fish Fryers (Potato Supplies)

Mr. G. Thomas: asked the Minister of Agriculture, Fisheries and Food if he is aware of the difficulties of fish fryers in obtaining supplies of main crop potatoes; and if he will now control the supply to ensure that adequate quantities are available to them.

Mr. Amory: I am not aware that fish fryers are at present experiencing difficulty in obtaining supplies of potatoes, though I know that they feel concern about their present high prices and about the availability of supplies for the remainder of the season. I am sure that control, even if it were practicable, would not produce extra supplies, and that it would cause many more difficulties for the fish fryers and other users than they will experience in a free market.

Mr. Thomas: Is the Minister aware that his complacency about this question is surprising? Is the right hon. Gentleman not aware that the fish fryers themselves, in association, stated in the document which I have forwarded to him that they feel that supply decides the price? It is no use his brushing the question off by saying that he is concerned only with the supply.

Mr. Amory: I do not think that the hon. Gentleman has understood me correctly, and I hope that he will read my answer very carefully. The meeting to which I have referred, which my Department held recently with the trade, included representatives of the fish fryers. The answer is based on that up-to-date information. I do not think fish fryers would welcome the imposition of price control at the present time.

Oral Answers to Questions — MINISTRY OF HEALTH

Speech Therapy

Mr. C. Hughes: asked the Minister of Health if he is satisfied that there is adequate provision for speech therapy in North Wales.

The Parliamentary Secretary to the Ministry of Health (Miss Patricia Hornsby-Smith): I am informed that, although no speech therapists are employed by the hospital authorities in North Wales, cases from that area requiring treatment which includes speech therapy are, by arrangement, adequately dealt with in the neighbouring region.

Mr. Hughes: Is the hon. Lady aware that a number of cases have been brought to my attention recently of children who are unable to obtain treatment? Could she say what arrangements have been made by the Ministry for proper treatment to be available within the area? Could she say to which region those children, or anyone else needing treatment, can go if they want the appropriate treatment?

Miss Hornsby-Smith: I am informed by the Welsh Board of Health that there are no known cases in North Wales awaiting such hospital treatment for speech therapy. If the hon. Member knows of any cases, I should be only too pleased to look into them. At the moment, when such cases arise they go to Liverpool. I must also point out that cases concerning school children come under the Ministry of Education and not the Ministry of Health.

Mr. K. Robinson: asked the Minister of Health if he will take steps to protect the public from exploitation by unqualified persons claiming to cure speech defects; and if he will publicise the fact that the services of qualified speech therapists are available to adults and children within the National Health Service.

Miss Hornsby-Smith: My right hon. Friend is considering the views of the bodies concerned on the statutory registration of these and other medical auxiliaries. With regard to the second part of the Question, my right hon. Friend does not consider that special publicity is called for.

Mr. Robinson: Is the hon. Lady aware of the serious increase in advertisements on hoardings and in the national Press of quack cures for stammering, stuttering and other speech defects? Is she aware that these are giving rise to serious concern among professional speech therapists?

Miss Hornsby-Smith: I think that the final answer will be reached when we obtain general agreement on a plan of registration of auxiliaries, but I am sure that the hon. Member's Question will have assisted.

Reciprocal Arrangements

Mr. Remnant: asked the Minister of Health if he will list the foreign countries with which he has made agreements for British nationals to obtain benefits comparable with those available under the National Health Service to foreign visitors to this country.

Miss Hornsby-Smith: I would refer my hon. Friend to my reply on 16th April to my hon. Friend the Member for Norfolk, Central (Sir F. Medlicott).

Mr. Remnant: Will my hon. Friend now give some reason for which nationals of countries which do not make such reciprocal arrangements should get the benefit of our National Health Service without payment?

Miss Hornsby-Smith: That is another question, and if my hon. Friend likes to put it down I will answer it.

Dr. Summerskill: Can the hon. Lady say which of the Commonwealth countries have reciprocal arrangements with us?

Miss Hornsby-Smith: They are listed in the reply to the previous Question of 16th April, if the right hon. Lady would look it up.

Suggestions Scheme

Mr. Page: asked the Minister of Health what organised suggestion scheme is in operation in his Department; how many suggestions are received from employees through that organisation annually; how many are adopted; what awards are made for such suggestions; and what he estimates to be the savings made by the adoption of employees' suggestions.

Miss Hornsby-Smith: Members of the staff are encouraged to put forward suggestions and there is a suggestions committee of the Departmental Whitley Council to consider them. Recently the suggestions have averaged 46 a year and 11 a year have been adopted. Awards in the form of book tokens are made

where appropriate. It is not possible to make an estimate of the savings that have resulted.

Mr. Page: Is my hon. Friend aware that the score of her Department is much better than that of some of the Departments of some of her colleagues? Is she aware that the British Productivity Council has been so impressed with the value of organised suggestion schemes that it has set up an ad hoc committee to see how they can be promoted? Will she give consideration to the report of that Committee when it is issued?

Health Nursing Services (Recruitment)

Mr. Royle: asked the Minister of Health if he has yet considered a communication from the Town Clerk of Salford referring to the shortage of candidates for the Health Nursing Services; and what steps he proposes to take to assist recruitment.

Miss Hornsby-Smith: Yes, Sir. Recruitment should be helped by the general improvement in salaries resulting from the recent Whitley agreement. The report of a Working Party on Health Visitors will shortly be published and my right hon. Friend will consult the interested bodies about any measures that are recommended.

Mr. Royle: Will the hon. Lady say whether the adjustment to which she has referred brings the salaries of the outside nursing services in line with those of the hospital services? If not, would she make representations that something might be done about it?

Miss Hornsby-Smith: The agreement reached about nurses with the Nurses and Midwives Whitley Council covers only hospital nurses, but it was also agreed that consequential adjustments would be made in the salaries of public health and domiciliary nurses and midwives, and when those new rates are agreed they will have effect from 1st April, 1956, as in the case of hospital nurses.

Executive Councils (Chairmen)

Mr. Royle: asked the Minister of Health in how many cases in England and Wales are members of the medical profession chairmen of local health executive councils.

Miss Hornsby-Smith: Twenty-seven at 31st March, 1956.

Mr. Royle: Does not the hon. Member regard the appointment of doctors as chairmen of executive councils as a rather undesirable practice? When all is said and done, no education committee would appoint a teacher to the chairmanship. Will not the Minister make representations to executive councils along these lines?

Miss Hornsby-Smith: I think the hon. Member misses the point. There are thirteen lay and twelve professional members on such a committee and they elect their own chairman. If in special circumstances they believe that one of their number who happens to be a doctor, or for that matter a dentist, is outstanding for the chairmanship, they are free to elect him.

Mr. Royle: Does that reply alter the principle?

Miss Hornsby-Smith: I know the case which the hon. Member has in mind, but I think that the answer in many cases is that if lay members attended as regularly as some professional members, they would be in a better position to vote for someone else.

Mr. Blenkinsop: Does not the hon. Lady appreciate that there is a point of substance here at which she might well look again? At the outset of the scheme the Minister appointed the chairmen. That was then changed. I think it is highly desirable that executive committees should consider whether they should not appoint a lay person in many cases, unless there are exceptional reasons for the contrary.

Miss Hornsby-Smith: The vast majority, of course, are lay chairmen.

Food Hygiene

Mr. Blackburn: asked the Minister of Health whether he will issue a circular to local authorities to remind them of those provisions of Statutory Instrument No. 1906, the Food Hygiene Regulations, 1955, which come into force on 1st July, 1956.

Miss Hornsby-Smith: My right hon. Friend does not think that a special circular is required for this as it is already known to the local authorities.

Mr. Blackburn: Is the Minister aware that meat is still being transported in unsatisfactory vehicles and that there is considerable anxiety that insufficient preparations are made to meet the requirements of the Regulations?

Miss Hornsby-Smith: If the hon. Member has any special cases in mind, I will be pleased to look into them. The local authorities, however, were fully advised last December, and I think it would be a reflection on the very considerable work they have already done to implement the provisions of the Regulations if we were to send them yet another reminder.

Medical Reports and Certificates

Mrs. L. Jeger: asked the Minister of Health what provision exists under the National Health Service regulations for patients to secure, at prescribed charges, certificates and medical reports required in connection with applications for compensation and other legal purposes.

Miss Hornsby-Smith: If a patient needs a certificate under one of a list of enactments specified in the appropriate regulations he can obtain it from his doctor under the National Health Service free of charge; certificates required in connection with claims under the National Insurance (Industrial Injuries) Act are included. I am sending the hon. Member a copy of the list of certificates, so specified in regulations, which can be obtained free.

Mrs. Jeger: Is the hon. Lady aware that there is wide divergence in practice? Will she look at the case of one of my constituents, who was asked for four guineas by a London teaching hospital for a certificate which was needed in connection for a claim for compensation following out-patient treatment which he had received at the hospital? Because the man did not have four guineas the solicitor was unable to proceed with the case. If I send the hon. Lady particulars of this and similar cases, will she look into them?

Miss Hornsby-Smith: Yes, certainly.

National Health Service (Economies)

Mr. Blenkinsop: asked the Minister of Health whether he will make a statement regarding economies in the National Health Service in view of the proposal


for total reductions in Government expenditure of £100 million in the current financial year.

Miss Hornsby-Smith: My right hon. Friend has no statement to make.

Mr. Blenkinsop: Is it not high time that a statement should be made and a clear guarantee given to the House that no economies whatever will be made in this service, especially in view of the strong recommendations of the Guillebaud Committee for increases in capital expenditure?

Miss Hornsby-Smith: If one took the hon. Member's question literally, it would mean that even if we found any extravagance we would not be able to economise.

Mr. Blenkinsop: The hon. Lady cannot pass this off. As we have had a statement in the House that economies may be made in this service, will the hon. Lady not state the form which any economics may take?

Miss Hornsby-Smith: I can only say that my hon. Friend has no statement to make.

Doctors (Excessive Prescribing)

Mr. Blenkinsop: asked the Minister of Health how many doctors have had their prescribing records examined by his Department during the last twelve months on grounds of excessive prescribing.

Miss Hornsby-Smith: Excessive prescribing can only be established following an investigation by the local medical committee, but the prescribing of 2,432 doctors in England and Wales was examined in the twelve months ending on 31st March, 1956, because the cost appeared substantially above average.

Mr. Blenkinsop: Would the hon. Lady agree that this is a valuable way of following up the costs of prescribing? Might it not be valuable to increase the amount of this work in view of the cases in which, for example, aureomycin is being prescribed by doctors for common colds, and so on?

Miss Hornsby-Smith: I do not think that any cases that appear to require investigation are being missed. Regional

medical officers have visited 468 doctors and have also written to 1,277, so they have covered a fair field.

Sir A. Gomme-Duncan: Is it not rather strange that the hon. Member who asked this Question should ask for no economies in the previous Question, but suggest economies in this one?

Proprietary Drugs

Mr. Blenkinsop: asked the Minister of Health whether he will make a statement on the progress of discussions with the manufacturers of proprietary drugs prescribed in the National Health Service.

Miss Hornsby-Smith: Following detailed criticisms put to it by the Health Departments of its proposals for fixing the prices of these preparations, the industry is now reviewing these proposals.

Mr. Blenkinsop: Can the hon. Lady say when she hopes to be able to make a further statement on this matter in the House?

Miss Hornsby-Smith: I cannot at the moment. As the hon. Member is aware, it is a tremendously intricate and difficult problem, with great variations between one firm and another in the industry and between those who do immense research and those who do none at all. My right hon. Friend has instructed that the industry should be given full opportunity of justifying or amending the proposals which have been put forward in view of the risk which precipitate and unwise action might involve for exports and for fundamental research. There has, however, been no delay on our side and we hope that before long we shall be able to reach agreement.

Maternity Services (Committee)

Dame Irene Ward: asked the Minister of Health if he will announce the personnel of the committee to inquire into the maternity services which he is proposing to set up.

Miss Hornsby-Smith: I will, with permission, circulate the list of members in the OFFICIAL REPORT.

The following are the members of the Committee:

The Earl of Cranbrook, C.B.E.—Chairman. Mr. G. F. Gibberd, M.S., F.R.C.S., L.R.C.P., F.R.C.O.G.

Mr. H. J. Malkin, M.D., F.R.C.S. (Ed.), F.R.C.O.G.

Dr. A. Beauchamp, O.B.E., M.B., Ch.B., M.R.C.S., L.R.C.P.

Dr. W. V. Howells, O.B.E., M.B., B.Ch., M.R.C.S., L.R.C.P.

Dr. J. Forest Smith, F.R.C.P., M.R.C.S.

Dr. Jean Mackintosh, M.D., Ch.B., D.P.H., D.P.A.

Miss M. Williams, S.R.N., S.C.M., M.T.D.

Miss V. Shand, S.R.N., S.C.M., M.T.D.

Lady Pakenham.

Mrs. Geoffrey Wilson.

Sir Basil Gibson, C.B.E., J.P.

Oral Answers to Questions — HOSPITALS

Personal Case

Dr. Stross: asked the Minister of Health whether he has noted the case of Vivienne Donger, now at Stallington Hall, Stoke-on-Trent, who is alleged to have been certified as a mental defective at the age of 11 years, only because her parents had parted and she later was considered to be educationally backward; and if he will bring these facts to the notice of the Board of Control.

Miss Hornsby-Smith: The grounds for certification in this case were that the girl was mentally defective and the subject of a report under the Education Acts that she had been found incapable of receiving education at school. The board of control is satisfied that for the present she needs the care and training provided under the Mental Deficiency Acts.

Dr. Stross: Has the hon. Lady seen the type of letter which this girl is alleged to have written—that which was reproduced in a Sunday newspaper recently? If she has seen it, may I ask whether she thinks that is the sort of letter which a mental defective can write?

Miss Hornsby-Smith: I have seen the Press item to which the hon. Member refers. This girl is being tried out in employment in domestic service and, if that is satisfactory, further consideration will be given to the case.

Dr. Stross: If there be substantial grounds for believing that this girl was wrongly certified, how are we to have any protection to ensure that this type of thing does not take place frequently?

Miss Hornsby-Smith: The hon. Member has missed the point I made in my initial reply. This girl was certified as a mental defective after being found incapable of receiving education at school, which is the normal process. The procedure was not on the basis which the hon. Member implied.

Consultants (Retirement Notices)

Mr. K. Robinson: asked the Minister of Health if he will issue amended regulations requiring full-time consultants to give regional hospital boards six months' notice of their intention to retire from the hospital service.

Miss Hornsby-Smith: My right hon. Friend does not think it would be appropriate to deal with this by regulations.

Mr. Robinson: Is the Minister aware that under the present three-month rule it is inevitable that important jobs like that of medical superintendent remain vacant owing to the length of time it takes to appoint a new consultant? Surely it is not unreasonable to ask a full-time consultant to give six months' notice of his intention to retire from the service. However she looks at the situation, would she ask her right hon. Friend to give serious consideration to this matter?

Miss Hornsby-Smith: Any such alteration would require the agreement of the Medical Whitley Council. It cuts both ways; one may make an appointment and, under the hon. Member's suggestion, have to wait for six months before the person concerned is released from his previous employment. I do not think that the three months' period is unreasonable.

Mr. Robinson: On a point of order. I referred only to when a consultant retires from the service, and that would not operate both ways.

Mr. Speaker: That is not a point of order.

Pontywal Sanatorium, Talgarth (Farm)

Mr. Watkins: asked the Minister of Health why he has decided to dispose of the farm attached to the Pontywal Sanatorium, Talgarth; and whether he will reconsider his decision so that the patients may be certain of a supply of fresh tuberculin tested milk twice a day, and other


products from the farm as well as sufficient land to rehabilitate patients in future schemes.

Miss Hornsby-Smith: Because the farm is not essential to the running of the sanatorium. The Welsh Regional Hospital Board reached this conclusion after a detailed investigation on the spot. My right hon. Friend is satisfied that the dietary of the patients can be kept on the required standard after the disposal of the farm, and that sufficient land is being retained to permit of any rehabilitation schemes.

Mr. Watkins: Is the Parliamentary Secretary aware that there is great disquiet in the district because this farm is being disposed of, especially when it is realised that thirty-five years ago the Welsh National Memorial Association took over the farm for the benefit of the patients?

Miss Hornsby-Smith: The hon. Member will appreciate that views regarding the treatment of tuberculosis have changed and that today it would certainly be considered most undesirable for patients suffering from tuberculosis to be working on a dairy farm. No patients whatever now work on the farm, which is quite a different procedure from that which operated when it was taken over.

Mr. Watkins: asked the Minister of Health the daily total of milk supplied to the Pontywal Sanatorium, Talgarth, for patients and staff at the present time from its own farm; the price per gallon now charged; what is the delivery charge; what arrangements are to be made for the supply of milk when the farm is disposed of; what will be the price per gallon to be paid; and what delivery charge will be made.

Miss Hornsby-Smith: On average, 71 gallons of milk are provided to the hospital by the farm daily; this is notionally charged at 3s. 6d. per gallon, with no delivery charge. Firm arrangements for a future supply of milk have not yet been made as it is proposed to continue farming until the autumn of this year, but a quotation of 3s. 6d. per gallon with a delivery charge of 3d. per gallon has been obtained.

Mr. Watkins: Does the hon. Lady not realise that by disposing of the farm the hospital will have no guarantee of fresh T.T. milk and to get other milk must pay

an extra delivery charge? Would it not be better to keep the farm going for the sake of getting fresh T.T. milk and maintaining a reliable source of vegetables and produce for the sanatorium?

Miss Hornsby-Smith: The supply of vegetables and the like will not be affected. It is only the dairy farm which is going, and an estate of about 100 acres will remain. My right hon. Friend has already stated in the House that it is outside our duty to operate farms as such other than those which provide occupation for the patients, which in the case of tuberculosis centres does not apply.

Student Mental Nurses

Dr. Stross: asked the Minister of Health how many student mental nurses it is considered must be recruited in order to achieve proper care of the mentally sick; whether he has noted that the Nurses and Midwives Council have recommended that student mental nurses over the age of 21 years on recruitment are not to receive dependants' allowances or free meals, and that salary increases will suffer a deduction of one-third for board and lodging charges; and whether he will take action so that free meals and dependants' allowances shall be provided.

Miss Hornsby-Smith: The numbers of student mental nurses must clearly be built up substantially above the present low level, but the optimum number depends on so many incalculable factors that it cannot be estimated with any precision. The new pay agreement has been freely negotiated on the Whitley Council and my right hon. Friend proposes to accept it in its entirety. I understand that every student mental nurse will benefit under its terms.

Dr. Stross: It it not none the less a fact that if the number of student nurses is appreciably to be built up, this is a very poor way of going about it? Would it not be a better form of incentive if they were given the allowances they used to have before this apparent increase in salary?

Miss Hornsby-Smith: In every instance there is a gain to all grades, and to some a very substantial gain.

Dr. Summerskill: Will the Parliamentary Secretary ask her right hon. Friend to reconsider his decision? This is a


most retrograde step. Today, it is of vital importance to introduce incentives so that these girls will work in mental homes. To reduce the incentive in this way will worsen the whole position.

Miss Hornsby-Smith: I can only assure the right hon. Lady that these provisions have been freely agreed by the nurses' representatives.

Dr. Summerskill: Not by the girls.

Miss Hornsby-Smith: By the nurses' representatives.

Oral Answers to Questions — MEDICAL RESEARCH

Human Performance (Alcohol)

Mr. W. R. Williams: asked the Minister of Health, as representing the Lord President of the Council, if he will make the Report of the Medical Research Council on which Professor George Drew has publicly commented available to Members of the House of Commons; and how soon he anticipates that this will be possible.

Miss Hornsby-Smith: The Medical Research Council proposes to publish the report being prepared by Professor Drew on his work on the effects of alcohol on human performance. The work is however not yet complete, and it is not possible at this stage to give a date for its publication.

Mr. Williams: Why is it impossible at this stage to give a date? A large number of people are anxiously awaiting the report. Why the delay?

Miss Hornsby-Smith: The hon. Member is very ready to blame us for the delay, but Professor Drew, who gave a lecture on this topic which has given rise to the interest in the subject, has not yet completed with the Medical Research Council and passed on to us the report which he and others are preparing on his experiments.

Oral Answers to Questions — PASSPORTS

Mr. J. Johnson: asked the Secretary of State for Foreign Affairs whether he will take steps to simplify the regulations for the obtaining of a passport.

The Secretary of State for Foreign Affairs (Mr. Selwyn Lloyd): There are no steps which I can properly take, in view of existing legislation, to simplify the procedure for obtaining a passport.

Mr. Johnson: Is the Foreign Secretary aware that ordinary people are a little "fed up" with some of the pettifogging regulations attached to the obtaining of a passport? For example, an applicant must specify the birth date of his father and mother and even produce certificates. If we cannot abolish passports altogether, will the right hon. and learned Gentleman not make an attempt in some way to simplify some of the existing difficulties in getting a passport?

Mr. Lloyd: I have great sympathy with what the hon. Member says. In fact, I think that the Passport Office does its work fairly expeditiously. Half a million passports are issued yearly and the time taken to issue each of them is under a week. I will, however, certainly look into the matter to see whether there is any way in which the application form can be simplified.

Mr. K. Thompson: Can my right hon. and learned Friend say whether there is anything in the regulations which makes it an offence for a passport photograph to bear any resemblance to the holder of the passport?

BILL PRESENTED

COAL INDUSTRY

Bill to extend the power of the Minister of Fuel and Power to make advances to the National Coal Board for capital purposes; and to alter the financial year of the National Coal Board; presented by Mr. Aubrey Jones; supported by Mr. Henry Brooke and Mr. Renton; read the First time; to be read a Second time upon Thursday and to be printed. [Bill 123.]

BUSINESS OF THE HOUSE

Proceedings of the Committees on Finance [Exchequer Advances] and Finance [National Loans] exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. R. A. Butler.]

Orders of the Day — WAYS AND MEANS

Considered in Committee. [Progress, 19th April.]

[Sir CHARLES MACANDREW in the Chair]

AMENDMENT OF LAW

Question again proposed,
That it is expedient to amend the law with respect to the National Debt and the Public Revenue, and to make further provision in connection with Finance, so, however, that this Resolution shall not extend to amending the enactments relating to purchase tax otherwise than by reducing any of the several rates of tax generally for all goods to which that rate applies.

Orders of the Day — BUDGET PROPOSALS AND ECONOMIC SITUATION

3.31 p.m.

Mr. Douglas Jay: If this nation could be saved by words alone, I think that our economic problems would have been finally solved by the Chancellor's speech last week. As he led us up one verbal blind alley after another, I was reminded of the words of King Lear, when he boasted:
I will do such things—
What they are, yet I know not—but they shall be
The terrors of the earth.
We are to have economies of £100 million, but we do not yet know where. We are to have some lottery bonds, but we do not know when. We are to have improved Government statistics, but not until the Chancellor can find the time.
On the other hand, I would defend the Chancellor against one charge which is being widely made against him in this debate. That is the charge that he has cunningly drawn a veil over the events of last year in order to conceal the blunders of his unhappy predecessor. Since the present Chancellor took over, we have had a series of official Treasury documents laying bear the follies of the Lord Privy Seal with a candour that, surely, can hardly have been accidental.
It all began with the February issue of the Treasury Bulletin for Industry. This is such a bitter attack on the Government's record that it might have been written by Mr. Randolph Churchill. It says this:

World conditions were as favourable for trade last year as this country can reasonably expect. Total world trade was rising fast, and there was no significant shift in the terms of trade in favour of primary products and against manufactures. Yet Britain's trade gap was nearly half as wide again as in 1954.
In the Economic Survey the new Chancellor pursues his attack against the Lord Privy Seal with a frankness which is worthy of a speech by Mr. Khrushchev about Marshal Stalin. No more than Mr. Khrushchev, apparently, does the present Chancellor believe in the old maxim De mortuis nil nisi bonum. He says this in his Economic Survey:
In 1955 world economic conditions were highly favourable. Output was growing rapidly in all the major manufacturing countries … the total gold and dollar holdings of the non-dollar world rose substantially during the year.
And what happened at home? The Chancellor piles on his indictment against the Lord Privy Seal in these words:
Although the world economic situation was favourable to the United Kingdom in 1955, the balance of payments was unsatisfactory and the gold and dollar reserves fell by over one-fifth. This external weakness was the result of home demand rising to the point at which our productive capacity was over-strained. …
What was the cause of the excess demand which led to all the trouble? Here are the Chancellor's own words:
The difference between the increase of domestic expenditure and the increase of domestic product amounted to about £100 million … and it contributed to a significant worsening in the balance of payments on current account.
And that £100 million was just a bit less than the tax relief which the Lord Privy Seal, in his own words, "gave away" in April a year ago.
So there is no need for us to criticise the Government's record this year. It has all been done for us by the present Chancellor. Indeed, I am not sure that there ought not to be a society for the prevention of cruelty to ex-Chancellors. I do not know whether it would be in order for the Lord Privy Seal to get up now to say of his successor that he is the best Chancellor we have.
However, the Chancellor's indictment of the Lord Privy Seal, whether fair or unfair, is, of course, literally true. Last year excess demand in this country, due to the electioneering Budget policy and reckless scrapping of controls, pushed this nation and the sterling area into an


acute balance of payments crisis while almost the whole of the rest of the world was prosperous. Conservative freedom certainly had its finest hour last year. It achieved what, perhaps, that other widely read writer, Mr. Richard Strong, in the Evening Standard, would call "its crowning glory."
I want now only to emphasise what is, perhaps, the most serious result of these mistakes. The sterling area gold reserve now is not merely 700 million dollars less than it was in October, 1951. It fell at the end of 1955 to 2,150 million dollars at a time when the French reserve had risen from 950 million to 2,120 million dollars, and the German from 1,984 million to 3,120 million dollars. The German reserve, which was barely half ours in 1951, is now nearly 50 per cent. greater.
The Chancellor said something about the relation of our present reserve to sterling area imports, but he did not give the comparison over the years. I will just give these figures. The sterling area gold reserve at the end of 1955 was down to only 20 per cent. of the United Kingdom's imports comprised with 45 per cent. in 1950 and 93 per cent. in 1938; and the reserve was also, at the end of 1955, only a little over 20 per cent. of sterling area's imports from the non-sterling world, against 40 per cent. in 1950 and 90 per cent. in 1938. In the words of the London and Cambridge Economic Survey for March—and I think they are true—
As a backing for current trading at the present levels of prices and volumes, the reserves are, clearly, miserably small.
On top of this, these reserves are equal to only four-fifths of the short-term claims by non-sterling countries on the United Kingdom. This is surely, to use no stronger language, a serious situation which the country really ought to understand. I doubt whether the public will be helped to understand it by the President of the Board of Trade's description of it, in the debate on Wednesday, as a situation of "unexampled prosperity."
What, however, has the present Chancellor really done in his so-called Budget, when his proposals are stripped of all the abundant verbiage, to set us on the road back from this rather deplorable plight? When, first and foremost, the country wanted some-

thing to halt the rise in prices, he has raised the price of bread and tobacco. Once again, to get the cost of living down, the Government push it up. May we be told—perhaps the Economic Secretary will tell us—why it is part of the great battle against inflation to keep railway charges down, but to push bread prices up? This is as puzzling to the ordinary man as how the Chancellor is helping recovery by pushing local authorities' borrowing from the Budget on to the City and nationalised industries' borrowing from the City on to the Budget.
On the wireless, the Chancellor said this was all part of a big plan. While we are glad to know he believes in planning, I do feel that in a corner of a two hours' speech the existence of this plan might have been divulged to Parliament. Unless it is a secret plan, the Economic Secretary is the ideal man, I suggest, to explain it to us this afternoon. He is, after all, the author of "Boyle's Law," which lays down that in conditions of Conservative freedom, when prices are pushed up, they go down. Will he tell us how things are to work out under the Chancellor's plan? Will he explain, in particular—and this is what puzzles me—why "Boyles' Law" applies to bread and postal charges and not to railway rates?
Of course, this new rise in the price of bread and tobacco will not just affect wage rates and export costs. It will also, before long, raise the salaries and wages which the Government pays, thus raising Government expenditure. It is because the Lord Privy Seal raised living costs last year that the Post Office had to raise wages last month, and the Postmaster-General is having to raise his charges this month. Indeed, the constant action of the present Government in raising living costs is one of the main reasons why Government expenditure has risen faster under this Government than it did under the Labour Government—to the terrible chagrin, of course, of Sir Bernard Docker, who is, I believe, resting at Monte Carlo in order to recover from the crushing effects of the taxation imposed by the present Chancellor.
We are now told that £100 million is to be saved "this year", in the Chancellor's own words. If that is really possible, why was it not done by the Lord


Privy Seal? He always told us he was making all possible economies. Last April, he said:
During the past year we have maintained a vigilant watch on both the totality of Government expenditure and its detailed distribution."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 50.]
What has the Financial Secretary been doing at the Treasury during these last eighteen months? The Chancellor himself has been in office from December to the middle of April; one would have thought he might have been able to save some part of this £100 million. Sir Bernard Docker thinks that he can save only £47 million. I find it hard to believe that the Chancellor, even inspired by his lottery bonds, can do twice as well as Sir Bernard who, after all, has had a life-long experience of the casino at Monte Carlo.
I see only two possibilities, and I really think we ought to know which the Chancellor has in mind. One is that the Government are producing some very secret aeroplanes which will be unable to fly or to shoot—we have had a lot of saving in that way during the last few years. The other possibility is that they intend to make new attacks on education, housing and health, as the Financial Secretary more or less openly hinted last week. If this is the case, the Chancellor should have had the courage to say so in his Budget speech. If there are not to be these economies and cuts in education, housing and health—and the mere suggestion of them causes anxiety in many people's minds—he should give us an assurance tonight. Unless one or other of those two possibilities is to be pursued, I do not believe, judging from the Lord Privy Seal's performance, that the Chancellor—to use his own austere, Gladstonian phrase—has a "cat in hell's chance" of getting this £100 million.
Will he also tell us whether he is counting into his present estimates the £50 million which we are asking Germany to contribute towards the cost of our troops in Germany, and which Germany has, so far, flatly refused to pay? If Germany is not induced to pay all or part of that £50 million, is there not already a large loss to set against this hypothetical £100 million? And is not the £670 million estimated for debt

interest for 1956–57 in the Financial Statement, even though it be £155 million above what the Labour Government spent in 1951–52, an optimistic estimate of what interest will cost this year?
Last year the Government spent on debt interest £38 million more than the Lord Privy Seal's estimate in the Financial Statement a year ago. I wonder whether the Chancellor could tell us tonight what this £670 million would be if the Treasury bill rates now prevailing were to prevail throughout the rest of the year; he must have made some assumption about that.
But the harshest effect of this new rise in living costs will be upon the old-age pensioners and others living on fixed incomes, as the hon. Lady the Member for Tynemouth (Dame Irene Ward) pointed out in the debate last week. Their plight is particularly ironic, at a moment when the Chancellor is at least succeeding, whatever else he has or has not done, in bringing the casino spirit into the Stock Exchange.
We ought not to allow our minds to be diverted from the plight of these people by all the various tricks, trifles and trivialities in the Chancellor's speech. Do hon. Members opposite realise that there are now about 1,650,000 people again on National Assistance—which, counting couples, probably means 2½ million people? Those figures were given by the Minister of Pensions and National Insurance in answer to a Question by my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand). During the debate in December, 1954, the previous Minister of Pensions and National Insurance said this:
It has been very distressing to see year by year a growth in the numbers having to seek help from the National Assistance Board."—[OFFICIAL REPORT, 21st December, 1954; Vol. 535, c. 2679.]
He then said that in deciding to raise insurance benefits the Government's policy would be "guided" by the aim of getting people off National Assistance. Since there is now very nearly the same number on National Assistance as there was when the previous Minister made that statement, we ask whether it is still the policy of the Government to get people off National Assistance. And, if so, what are they going to do about it?
We on this side feel this matter is pressing for one compelling reason, if for no other. The Chancellor, in refusing the old people even the 2d. tobacco relief, has really singled them out for the worst treatment in the whole Budget. We cannot accept this. We shall take every possible step throughout the passage of the Finance Bill to put this injustice right; and we shall confidently count on the powerful support of the hon. Lady the Member for Tynemouth both in the Chamber and in the Division Lobby.
Then there is the Chancellor's lottery, which, we gather, the Financial Secretary, like the hon. Member for Louth (Mr. Osborne), does not very much like. I suppose the Chancellor thought that as he was making bread dearer he had better make circuses cheaper at the same time. Though it is rather odd, even in this Government, to have the Financial Secretary deploring on Friday night what the Chancellor announced on Tuesday, I am not sure that the Financial Secretary may not prove the wiser of the two.
There are many people in this country, whatever our personal views may be, who do not like this kind of thing. According to the News Chronicle this morning—I do not know how accurate it is—31 per cent. of the electorate disapprove. Is it wise or dignified for a British Chancellor of the Exchequer, who has to ask people for sacrifices and, therefore, needs a bit of moral authority, to offend these people's feelings? Could the right hon. Gentleman not at least have left it to the Postmaster-General?
I thought that the Chancellor perhaps had the Postmaster-General in mind when he said:
Lyndoe or Old Moore may turn out just as reliable as Professor What's His Name or Dr. So and So."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 865.]
Will not a great deal of money for this raffle, like the money for the Chancellor's other saving attractions, be not really new savings at all, but be switched out of the Post Office, the building societies and perhaps the Co-operative societies? Incidentally, one wonders what the justification is for exempting the first £15 of Post Office funds and not doing so for funds in the Co-operative societies.
The Chancellor might have been wiser not to put this proposal in the Budget speech. He might, at any rate, have

found out what the National Savings workers thought about it. I am not sure that we in this Committee realise how grateful we ought to be to the National Savings movement, which has had to put up with a great deal, including the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke).
Secondly, do we really want to encourage people to think that we can somehow get over the country's difficulties by some form of gambling? I should have thought it more desirable to ask the practical questions, why we have got into our present economic plight nd how we can avoid this sort of crisis in the future. I will briefly have a shot at answering those questions myself.
What has been the real cause of the 1955–56 crisis? Basically, it has been the care-free attitude of relaxing too soon and under-rating the economic difficulties facing the country. This has taken many forms. There has, of course, been an element of sheer muddle. The hon. Member for Aberdeenshire, East (Sir R. Boothby), who talks so much good sense in these matters that he ought to cross the Floor of the Chamber, described the actions of the Lord Privy Seal in 1954–55, in relaxing all sorts of restraints when our gold was flowing away, as being those of a "blind man wielding a bludgeon."
There is also the familiar element, never absent from Toryism, of surrender to various shady vested interests. What can we think of the patriotism of a Government which, in September, 1955, after fifteen months of gold losses, launched into a crazy scheme of commercial television advertising?
An even more important cause has been the doctrinaire belief of the Government that getting rid of controls, and, in particular of import controls, was an earlier priority than building up the gold reserve. I quote the Financial Times of 4th April about the hasty removal of controls on European imports:
Over 1955 as a whole France managed to add to her reserves a considerably larger sum in gold and dollars than Britain lost. Yet the French have only now raised their percentage of liberalised imports to the level which Britain maintained throughout the period of heavy gold losses.
The President of the Board of Trade cannot sustain his argument that all the extra imports in 1955 were essential food,


raw materials or even semi-processed manufactures. Many were; but there were also these rises in 1955: imports of paper, paper board and manufactures rose from £33 million to £65 million during the year. No doubt much of that was newsprint, and no doubt it is very important that the principle of the freedom of the Press should be vindicated by Mr. Pierrepoint's memoirs in the Empire News. Even so, I doubt whether Mr. Pierrepoint's reminiscences are worth their weight in the nation's gold reserves.
Motor car imports in 1955 were up from £820,000 to £4,704,000. Clothing, footwear, travel goods and handbags were up from £8,600,000 to £18 million, and these were not the only items. The oddity of this is that the Government in any case now, and rightly, maintain import quotas on a large number of dollar goods and goods from other sources. The Minister of State, Board of Trade, said a fortnight ago that he was maintaining import quotas for balance of payments reasons on apples and pears. As far as I know, that has not compelled him to ration apples and pears in the home market.
The next cause of our difficulties over the last five years has been the ostrich-like belief of hon. Members opposite that, somehow or other, preferably by tax reliefs, the wealthy minority in the country can regain the share of the national wealth which they had in the years before the war. They cannot. And their attempt to do so, which led the Lord Privy Seal so much astray last year, is bound to undermine the economic stability of the country for a reason on which I beg hon. Members opposite to reflect, particularly the noble Lord the Member for Dorset, South. If Surtax payers and the property-owning few attempt, by higher dividends or prices or tax relief, to regain their pre-war share of the national income, the wage earners will hit back—as in conditions of full employment they can do—and prices and the cost of living will go up.
This means that unless the party opposite is prepared to abandon full employment, it cannot have both economic stability and a rising share of the nation's income for the wealthy few. It is the refusal of hon. Members opposite to face that dilemma—and not any world events—that got us into our difficulties last year. The Chancellor's popular booklet asks,

Must full employment mean ever-rising prices?
The answer is simple: if we try to go back to the pre-war distribution of incomes, it certainly must.
Thirdly, I blame the Government's doctrinaire belief in getting out of balance of payment difficulties almost solely by the Bank Rate method, which inevitably involves lower employment, production and investment than could be secured if we used other controls as well. The country cannot afford to lose production and investment due to these methods, which incidentally even Lord Chandos calls "indiscriminate". The United Nations Economic Committee's Report shows that this country invested only 6 per cent. of its net national income against 22 per cent. by Norway, a country with a high degree of planning and equality, which had the best figure in Europe. Russia is investing probably at least 25 per cent. of her national income.
Just because we rightly detest Russian methods, and rightly suspect her statistics, we should be extremely foolish to underrate her economic challenge. The evidence strongly suggests that Russian production is increasing at about 10 per cent. a year. America's production is increasing at 3 per cent. or 4 per cent. a year. Can the Chancellor tell us whether, after the redeployment activities of this Government in the last few months, our production now is more than 2 per cent. at the most above what it was a year ago? At that rate, the real standard of living in Russia may equal ours in perhaps fifteen years, and even that of North America in a period probably twice as long. What is more, do not let us ignore the fact that Russia, in the not far distant future, may become an importer of food and an exporter of manufactured goods, with ominous effects on our terms of trade.
Faced with this challenge from abroad, what should we do as a nation to profit by our experiences since 1945 and to build up our economic strength in the future? It is not really hard to answer that question. First, I suggest that the sterling area must now achieve an adequate gold reserve. I suggest about 10,000 million dollars as a target. That must be the primary aim to be achieved before we make any more experiments in dismantling import quotas or indulge in


foolish talk about convertibility. In the past few years we have repeatedly made the mistake of trying to liberalise first and to build up the gold reserve afterwards.
Secondly, to build up this reserve we must, as a first priority of internal policy, achieve a steady balance of payments surplus of about £300 million a year. I am glad to see that the Government still pay lip service to this, though very little more. This means, inevitably, that we must hold down the level of luxury imports.
Thirdly, we must have a larger investment programme. In the light of what both America and Russia and most of Europe are investing annually, we ought in future to regard our own industrial investment not as the first thing to be cut every time excessive spending pushes us into a balance of payments crisis, but as a steady priority to be maintained year in and year out.
It is certain that we shall not get both high investment and a balance of payments surplus without these two things. The first is high production. That means full employment, which I unashamedly interpret in 1956 as meaning less than 2 per cent. unemployment. Of course, if we try those methods of readjustment or redeployment, or whatever the Government call it, which involve short-time and unemployment, then we shall not get high productivity. Unemployment is the enemy of productivity and the father of restrictive practices.
We must have a positive export drive, at least inspired and guided by the Government. I ask the President of the Board of Trade to believe that if we are to regain the share of world exports which we have lost in these last two or three years, we need something of the spirit, though not necessarily the methods, of the wartime production drive and of the export drive in the years immediately after the war.
If there were more time I would go into this in detail. Now, however, I will only draw the attention of the President of the Board of Trade to an article in his own Board of Trade Journal for the month of April. There, a British manufacturer tells of his success in the Canadian market and says this:

It was not until 1950, when the Government urged a concerted export drive to dollar markets that we in our firm embarked on the enterprise of trying to sell goods to Canada.
That is just one instance of where the Government supplied the original impetus.
To encourage exports, one thing that the President of the Board of Trade ought to do is to tell the motor car industry that though we in this country can probably afford to have a large car industry selling mainly abroad, we certainly cannot afford a large car industry selling almost entirely in the home market.
Finally, what are the immediate practical steps necessary in that rather formidable task? I think that the first is an honest recognition that we must maintain restraints on superfluous spending, partly by private saving, of course, but also by taxation on company profits and capital gains, and by a genuine Budget surplus.
I thought that the most foolish passage in the whole of the speech of the Chancellor was where he sneered at public savings. What the right hon. Gentleman said then contradicted what he said elsewhere in his speech. It contradicted the conclusion he reached, and it also contradicted the excellent speech of the Economic Secretary at Droitwich a fortnight before, when the hon. Gentleman used these words:
For a long time to come the Government will have to do quite a bit of saving by itself. We must get used to rather larger Budget surpluses than we have had in the past.
The hon. Gentleman was perfectly right, and I only wish that the Chancellor would listen to him. Indeed, the right hon. Gentleman seems to be gravely out of touch with both his Economic Secretary and his Financial Secretary.
Therefore, I submit, that the only way to end inflation, and to preserve full employment, is to achieve again the sort of collective agreement on restraint by all sections of the community which the late Stafford Cripps attempted in 1948

Viscount Hinchingbrooke: Will that provide the incentive for the export drive which the right hon. Gentleman mentioned?

Mr. Jay: The answer to the noble Lord is that exports increased faster in those years than they had ever done before or have done since. We had a balance of


payments surplus in 1948, 1949 and 1950. If we had such collective restraint, the Government would have to use all possible methods to keep the cost of living steady. I believe that wage and salary earners could then reasonably be asked to forgo restrictions on productivity and to moderate pay claims in the general interest. At the same time, property owners and Surtax payers could be expected, in their turn, to accept progressive taxation on unearned incomes, profits and capital gains, and a steady Budget surplus as all part of the long-term recovery policy of this country.
It may be as hard for the Tory Party to accept progressive taxation and public saving, as it is supposed to be for a camel to go through the eye of a needle. But if hon. Gentlemen opposite find it impossible, then inflation will continue, the crisis will recur, and the gold lost since 1950 will not be regained. If, however, we could agree all round on a national policy of restraint, on those or similar lines, I believe that it would be perfectly practicable to build up again the economic strength of this country, and to do it, as we all desire, by the methods of a free society.

4.8 p.m.

The Economic Secretary to the Treasury (Sir Edward Boyle): At the outset of my speech I should thank the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) for his reference to me as the Rasputin of the Treasury Bench. In his speech on Thursday my right hon. Friend the Financial Secretary to the Treasury remarked that he did not think that I resembled an ascetic and bearded monk. Certainly, I have never made any claim to look ascetic, and I think that the right hon. Gentleman the Member for Battersea, North (Mr. Jay) looks considerably more monastic than I do.
The right hon. Gentleman has made a speech which I am sure all of us in this Committee have listened to with considerable enjoyment. Indeed, I think I should be justified in borrowing a familiar gambit from the Oxford Union and saying that I always enjoy it whenever I hear it, which is quite often. However, there are one or two comments I want to make.
I thought that the right hon. Gentleman was a little less than fair, and, indeed, a little less than frank, when he

talked about the loss of gold and dollars last year. It is worth remembering that in the last month during which he and his colleagues were in office they lost 300 million dollars—in a single month. Furthermore, the drain on our gold and dollar reserves last autumn was halted sharply by the very effective speech of my right hon. Friend the Lord Privy Seat, at Istanbul. In fact, it is worth remembering that in spite of the repayment of the American Loan, for which we on this side of the Committee have, after all, no direct responsibility, our reserves are only 68 million dollars lower today than they were last September, and they have risen in each of the last three months.
I want to make some comments upon the speech made by the right hon. Member for Huyton, last Wednesday. I thought that the speech was a rather mild affair compared with the severe and schoolmasterly strictures to which we became accustomed from the Leader of the Opposition. Never since I have been a Member of Parliament have I listened to a milder criticism of a Budget statement.
The right hon. Member for Huyton began his speech by remarking that the Economic Survey was brutally frank. Certainly, the Survey is a good deal franker than some of the statements put before the British public during the Administration of right hon. Gentlemen opposite, and we are not in any way ashamed of that. However, I do not think it was quite frank of the right hon. Member to say, with no qualification at all, that 1955 was a gloomy record of a year of stagnation and failure.
I do not want in any way this afternoon to underrate the seriousness of the situation, but do not let us forget what was physically achieved in the British economy during 1955. Despite the fact that we entered the year with our resources fairly fully employed, we achieved an increase in production of nearly 5 per cent. Furthermore, fixed investment, other than housing, increased last year by £235 million. By far the largest share of that increase has been achieved by private industry.
I see from today's newspapers that the right hon. Member for Ebbw Vale (Mr. Bevan) said at Dewsbury on Sunday that he did not believe it was possible for our troubles to be solved in a permanent


fashion except by a vast extension of the area of public ownership. I thought that that had become rather old-fashioned some time ago on the Opposition benches. In the light of the achievements of private industry last year, the sooner right hon. Gentlemen opposite abandon that policy the better. It might be a good idea to send the right hon. Member for Ebbw Vale off on an extended trip to the Colonies, in which he now takes such an interest, and take advantage of his absence to haul down those colours from the mast for good and all.
In addition to fixed investment, stocks and work in progress rose last year by some £210 million. These, at any rate, represent solid physical assets. It is surely very much better to build up our stocks when the terms of trade are favourable than to do as right hon. Gentlemen opposite did. They let the stocks run down after devaluation and had then to build them up just at the time when world prices were rising sharply against us.
One other fortunate thing happened to the economy last year, to which too little attention has been paid. The Labour Party was roundly defeated in the General Election. We ought not to forget the admission made by the right hon. Member for Dundee, West (Mr. Strachey) in his famous article in the New Statesman on 6th February, 1954, when he said that the return of a Labour Administration would be likely to result in gold and dollars flowing out like a torrent. I have not the least doubt that that would have happened.
Furthermore, the principal way in which gold and dollar reserves would have flowed out would have been by what are technically known as leads and lags. That is a form of speculation about which right hon. and hon. Members opposite would have been able to do absolutely nothing. We should have had a very much heavier gold and dollar loss in June, July and August last year if there had been a change of Government at the end of May. Of that I have no doubt at all.
I want fairly early in my remarks to comment on one point from the speech of the right hon. Member for Battersea, North. I thought that one of the most sinister features of his speech was his

obvious dislike of the Government's disinflationary policy. I should have thought that experience showed only too clearly that physical controls cannot prove useful unless monetary and budgetary policy are moving in the same direction, and in no way can physical controls be a substitute for a policy designed to bring us into internal balance at home.
Having listened to the right hon. Gentleman, I have no doubt at all that if he and his colleagues were in power we should be faced with a policy of perpetual inflation more or less inefficiently held in check and suppressed by a system of physical controls. That, of course, is absolutely the sure recipe for a return to a siege economy.

Mr. Jay: That was not what I said at all. I said that I thought it was a mistake to rely wholly on monetary policy and not to use a balanced combination of the various instruments.

Sir E. Boyle: No, when the right hon. Gentleman reads his speech he will find that he did not go as far as that. He definitely implied that the whole of the policy of disinflation at home was a mistake because it led to unemployment and to an attempt at redeployment.

Mr. Jay: If the hon. Gentleman directly contradicts me, I am bound to interrupt again. I said that if one relies wholly on this method one will achieve a readjustment with a lower level of production than if one had been willing to use other controls as well.

Sir E. Boyle: I am glad that the right hon. Gentleman has repeated his views in a less extreme form than when he expressed them earlier.
Many speakers in the Budget debates have referred to the Government's policy in respect of investment. I am sure we much enjoyed the story of the right hon. Member for Huyton, about the Scottish preacher who said "Lord, I was praying for rain, but this is becoming ridiculous." It does not fall to my duty, nor, I should think, to that of the right hon. Gentleman, often to conduct public converse with the Almighty, but I must say that I can imagine circumstances in which such an expostulation might not seem altogether unreasonable.
I think that the Labour Party sometimes claims rather too much virtue for itself in the matter of curbing consumption and stimulating investment. The right hon. Member for Huyton painted a moving picture of the late Sir Stafford Cripps as a sort of beneficent scarecrow waving his arms vigorously at all intruders who wanted to nibble at the seed corn. It is worth pointing out that this reign of virtue came sharply to an end with the devaluation of the £.
If right hon. and hon. Members opposite will look at the figures they will find that in 1950 consumption in this country rose by £475 million and investment fell by £20 million. Furthermore, I do not think that the Leader of the Opposition would seriously claim that he fought the last General Election on a very rigorously anti-consumption ticket. On the contrary, as we all remember very well, he promised the people expenditure that would amount to several hundred million pounds over the course of the next Parliament. He cannot deny that. I would remind him of one short quotation from his own speech in the last Budget debate:
There is nothing off tobacco, nothing off beer, nothing but this trivial change in Purchase Tax, nothing off the petrol tax …"—[OFFICIAL REPORT, 20th April, 1955; Vol. 540, c. 202.]
I do not think that right hon. Gentlemen opposite are quite as virtuous—

Mr. Hugh Gaitskell: The hon. Gentleman will remember that debate, and he will also remember that I was protesting that if the Government were going to give money away in that fashion they could give it away much more fairly, and I instanced a number of methods of doing so.

Sir E. Boyle: I remember the debate, but I think the right hon. Gentleman laid considerably more emphasis on the tax reliefs that he would like to have seen. I cannot remember that he displayed any very strong opposition to the tax reliefs which we were then proposing.
I can assure the Committee that the Government have in no way lost their belief in high and rising levels of investment in this country. As my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) very pertinently pointed out in an intervention the other night, the level of gross fixed investment in 1955—this was at 1948 prices—was very nearly

£500 million higher than it was in 1951. Furthermore, we shall certainly have a very considerable increase in fixed investment this year. I cannot give the Committee the exact figure but it will be considerably more than £100 million.
In the closing words of his Budget speech, my right hon. Friend the Chancellor specifically related his Budget proposals to the need for increasing investment. My right hon. Friend used these words:
It is a savings Budget. The Budget surplus, the Government saving in expenditure, and private savings, will make a foundation upon which we can take up without danger the task of increasing investment for the future. The rate of our progress during recent years has made it necessary to slacken the pace a little, but the forward march goes on."—[OFFICIAL REPORT. 17th April, 1956; Vol. 551, c. 886–7.]
I think it is fair to say that in Britain today there is a growing sense of the importance of a high level of investment. Manufacturers and businessmen are all the time becoming more aware that they will only be able fully to increase their sales in highly competitive world markets if they constantly renovate their plant. What is perhaps even more welcome, I think, is that there is a growing sense of the economic and, perhaps, the moral significance of a high level of investment, and of its effect on the standard of living.
On the other hand, there are three considerations which I do not think that hon. Members opposite can really deny. However fast one wishes to increase investment, we have, first, to consider the competing claims of our export markets and, of course, these markets are very largely markets for investment goods. Secondly, the industries which produce investment goods have not an unlimited capacity, and, thirdly—by far the most important—there is the need to restrain inflation.
Let me leave no doubt in the minds of the Committee about this. The Government are absolutely determined to end inflation and bring supply and demand into balance, because that is the only way that we shall secure stable prices, and this cannot be done by artificial means. This can only be done by resolutely pursuing the policies upon which we have embarked. We are determined to bring supply and demand into balance so that we can lay the foundations for a further advance and step up again the level of


production investment in the future. These are the twin aspects of our policy and we intend to pursue them with resolution.
There were two more technical points in the speech of the right hon. Member for Huyton with which I should like fairly briefly to deal. The right hon. Gentleman asked specifically about the balancing item. He asked what was the explanation of the large item of £175 million, representing the difference between the total net outgoings of the United Kingdom in 1955 of £404 million and the loss from the gold and dollar reserves of £229 million. He said that this could not be accounted for wholly by errors and omissions and I think that the right hon. Gentleman suggested that it included a large inflow of short-term capital, so we were, he suggested, dealing in hard currency and lending in soft currency. That is rather a technical point.
I did my best to explain it at a Press conference after the balance of payments White Paper was published, and I hope that the right hon. Gentleman will be able to understand and accept this answer. He may perhaps not have noticed that the total net outgoings to which he referred included the outflow of recorded short-term capital of £134 million, and I think that it is exceedingly unlikely that the unexplained £175 million is all due to unidentified short-term capital movements.
It is probably not the case that there was any net inflow of capital to the United Kingdom, but rather that the net outflow was not as big at £134 million suggests, and it is that figure which will have to be corrected in time. I cannot give any precise information for the figure of £175 million. It is an errors and omissions figure and the estimate of £103 million for the overall deficit for 1955 may not, in fact, turn out to be so big when revised figures are published.

Mr. Harold Wilson: I am grateful to the hon. Gentleman for his explanation. I have done my best to understand it, as he said he hoped I would. We are all aware of the figure of £134 million. Are we to take it that the hon. Gentleman does not believe the figure in the table of paragraph 1 of the White Paper and that what is almost certainly at fault in that table is that the

£134 million outflow is incorrect and, consequently, the £103 is incorrect? If so, where are we with these figures?

Sir E. Boyle: The right hon. Gentleman knows that a number of items in these tables have nearly always to be corrected in subsequent years. The turnover is so large a one. I merely wanted to explain where I thought that part of this £175 million can be accounted for.
The next point which the right hon. Member for Battersea, North specifically asked about was production. The right hon. Gentleman asked whether production this year was likely to rise or fall, and what the Government thought would happen. I can say this to him. We shall, of course, achieve an appreciable increase in production this year. The fact that investment has risen by the amount I have mentioned is itself an indication of that, but I cannot give the right hon. Gentleman a precise estimate. It will depend to a large extent on how smoothly the redeployment of our resources from production at home to production to export takes place.
I think that I should now pass to the Budget itself, and here I would begin by saying that I do not think that anyone has seriously criticised my right hon. Friend's estimate for his surplus. I do not think that the right hon. Gentleman the Member for Battersea North need worry about any discrepancy between the Budget and the remarks I made at Droitwich, because I began that speech by saying specifically that there was nothing that we wanted to do more than increase private savings; and it is precisely private savings which my right hon. Friend will have done so much to stimulate through his Budget.
Furthermore, my right hon. Friend specifically said in his Budget speech:
What matters, of course—the only thing that matters—is whether the total amount of savings by the whole nation, whether compulsory or voluntary, is sufficient to meet the needs of investment, and what Budget surplus is required to make that certain."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 862]
It was precisely that point that I was trying to establish.

Mr. Jay: I know that the Chancellor of the Exchequer very sensibly said that. Why did he contradict it by sneering at public saving, a little later on?

Sir E. Boyle: My right hon. Friend did not contradict it. He had a surplus of £460 million, but he pointed out, what is indubitably true, that it is better if one can finance investment to a large extent out of voluntary saving rather than by compulsory savings through a Budget surplus.
The only controversial issue in the debate was the bread subsidy. Even that was hardly noticed until the right hon. Gentleman reminded his colleagues that they ought to be objecting to it. There is one comment I would make concerning the bread subsidy. The right hon. Gentleman the Member for Huyton produced a sort of model budget in the Daily Herald and I noticed that there was nothing there about putting the bread subsidy back, and I should indeed be very surprised if these food subsidies ever are put back. The party opposite has always refused to respond to any challenge when asked whether, in fact, these subsidies will be replaced.
I pass now to the part of the Budget which is concerned with savings. I recall that the hon. Member for Sowerby (Mr. Houghton) asked the other day, "Why save?" He said, "What is the point of saving?" I think that the most sensible reason for saving is because it obviously is the wise thing to do, particularly in an age of technical advance. Anyone who has bought a durable asset, such as a television set or a washing machine, will know that it is very much better to buy the whole thing—or a large part of it—out of savings and so avoid having to pay such a high rate of interest. Furthermore, the more one can save for one's old age the better, for one does not then have to accept a cut in one's standard of living after retirement. That is the best reason for saving.
I want now to turn to Premium Bonds. I think that the hon. Member for Huyton was a little solemn about this when he referred the other day to the bonds as a "squalid raffle." That does not seem to be the view of the country. We are always slightly anxious when the right hon. Member for Huyton begins a sentence with the words "I am bound to say", because one knows that something rather solemn is coming.
The right hon. Member for Huyton pales before the scholastic speech of his right hon. Friend the Member for Ebbw

Vale on this subject as Dewsbury, on Sunday. He said:
I do not mind people having a flutter. I do not mind an individual who sits down and has a bob on a horse, so long as he does not put his children's shoes on the horse. I do not even mind a man putting his shirt on a horse so long as he does not put someone else's on. … I am not a Puritan and I like people to have a good time. But I do not like gambling.
When I read that passage, I could not help feeling that the right hon. Member was setting himself up as the poor man's Thomas Aquinas, so subtle was the arguing. I think that I prefer the rather more robust approach of a former colleague of hon. Members opposite, Mr. Crosland, who said in a broadcast, just before Christmas:
If I suddenly had a large increase in income, I have no doubt that I should spend a large part of it on smoking, eating, drinking, gambling and similar deplorable recreations; and I decline to debase myself morally on that account.

Mr. Ellis Smith: Can we be told the publication?

Sir E. Boyle: The hon. Member will find it in The Listener dated 8th December, 1955. There is a great deal to be said for that more direct attitude to this question.
I do not honestly believe that today the country really believes that there is anything wrong about a Premium Bond of this kind. Certainly, we shall read a great deal in the Press and hear a good many gramophone records of one kind and another on this subject, but I do not believe that the majority opinion of the country will be in favour of them.

Dr. Horace King: Does the Economic Secretary not appreciate that Nonconformist opinion is fundamentally opposed to gambling and to the Premium Bond?

Sir E. Boyle: That is a matter which we can safely leave to the wise judgment of the National Savings movement, with whom my right hon. Friend is very closely in touch.

Mr. George Chetwynd: Why the pessimism of his right hon. Friend the other night at Hampstead?

Sir E. Boyle: I have seen a speech of my right hon. Friend in full and the hon. Member need have no fears about that.

Mr. H. Wilson: The Economic Secretary will recognise that this question cannot be settled purely in terms of popularity. Indeed, last week I said that I had no doubt that this would be very popular. That is not the issue. Does he not feel that it is the duty of the Government and of the House of Commons to bear in mind the very strong feelings of a quite substantial minority on this matter and that they should not try to do it by a straw vote, or a Gallup Poll? Will he further recognise that while I and many others feel that there is no harm in the Small Lotteries and Gaming Bill of my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) for private lotteries, that is very different from having the whole power of the State in gambling of any kind?

Sir E. Boyle: My right hon. Friend will deal with this matter later. He is in close touch with the Savings movement about it. I do not think that the right hon. Gentleman need take this too seriously.
Before I conclude, I want to say a word on the subject of monetary policy. The Government's monetary measures can really be divided into three categories. First, there are those measures designed to curtail demand for credit, that is to say, the high Bank Rate, the hire-purchase restrictions and the control over capital issues. I should like to repeat what my right hon. Friend said in his February statement: in cases where there are requests to borrow £50,000 or more the Capital Issues Committee would not be influenced by the plea that a contract had already been entered into; that statement still stands.
The second group of measures is those designed to reduce the supply of money. Here again, the higher Bank Rate has its part to play in so far as it limits the supply of credit by putting pressure on bank liquidity through attracting funds from bank deposits into Treasury bills. This was emphasised by Lord Balfour of Burleigh in a number of articles and speeches. There are other means of limiting the supply of money, for example, through a large above-the-line surplus which my right hon. Friend is running this year; there is the continued policy of transferring the borrowing of local authorities from the Public Works Loan Board

to the market; there is the temporary transfer of nationalised industries' borrowing from the market to the Exchequer; and, finally, there is my right hon. Friend's issue of new National Savings Certificates.
In addition to those—this is a point to which specific attention has been given by the public—there is a question of the funding of the floating debt, that is to say, by paying off Treasury bills and replacing them by other forms of Government borrowing. In so far as the Government are successful in offering securities to the public there is a two-fold disinflationary effect, because the subscriptions, on the one hand, to the securities take money out of circulation and reduce the profits, and, at the same time, the Exchequer uses the proceeds to repay Treasury bills and thus reduce the liquid assets of the banks. All these various forms of funding and reducing the credit base will be used steadily all the time. Of course, the issue of £250 million of 3½ per cent. Treasury stock which was announced over the weekend is the latest instance of this policy.
Finally, I want to emphasise this point. It is not enough to reduce the supply of money, because 1955 showed that a reduction of bank deposits can be accompanied by an increase in business activity. The reason is very simple. To carry out a disinflationary monetary policy, we have not only to keep a curb on the supply of money, but also to reduce the velocity of the circulation of money and it is precisely for that reason that it is important to reduce the level of bank advances.
I pointed out last July that it is extremely important that banks should keep to their conventional liquidity ratios by curbing advances rather than by selling investments, because investments tend to be bought by relatively inactive deposits, whereas every new advance creates a new active deposit. Since my right hon. Friend made his request to the banks last year, bank advances to customers other than the nationalised industries have been reduced by about 6½ per cent. and there is no doubt that a reduction in bank advances has had a sharp effect on the level of consumption.
If it had not been for my right hon. Friend's request last year, it is very likely


that the level of consumption would not have risen by only £290 million. That policy is continuing to be pursued. A number of my hon. Friends have specifically asked me about prescribed liquidity ratios. I can only say this afternoon that there is a lot to be said on both sides of that controversy which is still being studied.
In conclusion, the right hon. Member for Huyton, in his speech on Wednesday, ended by saying that the choice before us today was between a policy of personal cupidity and a policy based on the moral purpose of the nation. I say to him in all sincerity that in appealing to the moral purpose of the nation he is appealing to a spirit which I honestly think does not have much relevance to what a very large number of people feel, whatever their political views may be.
I would quote in support of this what was said by the right hon. Gentleman the Leader of the Opposition, in his article in the Socialist Commentary, which was so widely quoted last July. He said:
I fancy that in the last year or two more and more people are beginning to turn to their own personal affairs and to concentrate on their own material advancement. No doubt it has been stimulated by the end of post-war austerity. TV, new gadgets … Call it if you like a growing Americanisation of outlook. I believe it's there, and it's no good moaning about it.
I think that that is true. The right hon. Gentleman also quoted from an interesting letter, from a member of the Manchester Labour League of Youth, who made exactly the same point and said:
My generation … is living well and looking to the future, which is where it appears the Tories are looking. Indeed, my ordinary working-class friends, engineers, clerks and the like expect that when they are older and married, they will afford such a consistently high standard of living as to be able to own a house and a car.
I think that that is a very widespread feeling in this nation, and I do not believe that it is any good thinking that, even if we wanted to, we could go back to the sort of moral climate which existed in this country in 1948 and thereabouts. I believe that there is nothing more important than getting our economy into such shape that more and more people are able to satisfy their legitimate aspirations.
The policy of the Government can be stated quite simply. It is to curb infla-

tion; to see that we have a strong £ sterling, and a stable balance of payments, so that we can lay the foundations of higher living standards in the future. By this means, more and more people will be able to pursue their own legitimate advancement in their own way and to gain experiences which would not have been possible to people of earlier generations.

4.42 p.m.

Mr. Ellis Smith: Several times during the past few years I have suggested that the Budget debate and the economic debate should be taken separately and at different times. I am now more convinced than ever of the necessity for that, and I am very annoyed that, when the date of the Budget was announced, I did not make another protest against these proceedings.
I spent the whole of Saturday afternoon with some of the most informed men in the sphere of nuclear energy—the peaceful use of atomic energy and the development which must come as a result of these new scientific ideas. For two and a half hours 400 men were considering what contribution they could make towards improving the present serious economic situation.
After having heard them, I come to the House and hear speaker after speaker making debating points and narrow political points—just getting at each other—and quoting speeches from the past, none of which makes any contribution towards solving our serious economic problems. The time has arrived for us to give a constructive lead to the country, as was given to it in the war, and to end these petty, Victorian ideas of scoring off each other.
In his Budget speech, the Chancellor said:
… on 3rd September, 1939, it"—
that is, the National Debt—
stood at about £8,400 million. On 4th August, 1914, it stood at about £645 million.
At present, it is £27,040 million. This is a very serious matter, especially for productive industry, but no constructive proposals are being made to deal with the position, in spite of the fact that we are more dependent upon the export trade than we have ever been. All this is bound to have an effect upon the cost of production and our costs in world markets.
The Chancellor also made a point about financing nationalised industries. I find some inconsistency here, compared to the policies applied in connection with local authorities. The Chancellor said:
I propose, therefore … to meet these capital requirements out of the Exchequer … I propose to move a procedure Resolution in order that Parliament may embody the necessary provisions in the Finance Bill."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 857 and 864.]
I should think that that must necessarily mean that, in future, Ministers responsible for the nationalised industries will be subject to interrogation in the House. If the Chancellor accepts responsibility for financing them, it will be public finance, and the House of Commons, being responsible for the finances of the country, should have the right to interrogate Ministers about the running of those industries.
That is a fundamental change, which I welcome. Some of my hon. Friends have had experience in industry and would under no circumstances put down Questions of detail about day-to-day policy, unlike some hon. Members opposite. We say that on fundamental questions of policy elected Members have a right to interrogate Ministers. I welcome this proposal upon those grounds.
The Chancellor also referred to the Macmillan Committee. I remember that Committee, and also those who served upon it, and I propose to make some observations about it later, if I have time. When the Chancellor was speaking, I thought of the way he used to look when he stood here twenty years ago, a smart-looking young man—

Mr. John Rankin: He has changed.

Mr. Ellis Smith: I served in the First World War, and he looked so much like a Guards officer that I was bound to be prejudiced. However, I give credit where it is due. He was independent and courageous, and he put forward constructive proposals. He was constantly speaking of planning. Nowadays, he has changed.
Governments constantly adopt policies of expediency. Industry is accepting its responsibilities and is producing results, while Government after Government carry on with policies of expediency. It is our duty to make an analytical

examination of our position and then put forward constructive proposals to deal with it. It is the economic basis of a country which carries its political superstructure, and that basis needs reinforcing and modernising.
We now have a great opportunity, but until the Government are prepared to seize it we shall continue to go along the road which we are travelling at present. With science and a twentieth century policy, this country could be assured of a great future, but there is some danger of the people again beginning to lose confidence. Before the war, it was obvious that more and more people in this country were losing confidence in the ability of the democratic machine to deal with problems on a big scale, but, as a result of this country's war effort and of this House making its contribution to that war effort, the people's confidence in the ability of the democratic machine to deal with problems in a big way was fully restored.
Then, as a result of several years' constructive work by the Labour Government, that confidence was reinforced because of that Government's social legislation and the constructive manner in which they dealt with our problems. Today, I can again see that confidence being affected. It is not apparent to any serious degree among the people yet, but I can detect signs of a very similar feeling of loss of confidence at the present time, and it is because I am concerned about it that I want to clear my own conscience and put forward proposals which I think this country should be considering and accepting.
First, let us take the position in regard to world trade. In 1850, our proportion of world trade was 20·4 per cent., whereas in 1953, according to the latest figures which I have, it had gone down to only 12 per cent. Whereas, in 1851, our population was 27 million, it is at present 50 million. Those figures indicate a very serious situation, because in addition to the statistics which I have just quoted, we must remember that we have also built up a relatively high standard of living, which we on this side of the Committee wish to retain. In my view, that is the supreme task with which this country is faced. The former Chancellor of the Exchequer and several others have made statements that they want to work towards bringing about a great


improvement in that standard, and in that respect I think that we all share their desire.
Having said that, let me turn to the situation with which we are confronted today. Our main and immediate problem is the balance-of-payments problem, and no matter how we may juggle and try to side-track the issue, that is the immediate problem with which the country is concerned. In my view, too much has been said which has had a discouraging effect. Too often it is said that this situation has been brought about by increases in wages.
If we examine the figures published in the Monthly Digest of Statistics, we find different proportions of the national income spent in various ways, and we discover that it is not wage increases at all which have brought about this situation. In addition, we must remember that it is the case that wages chase prices, not prices that chase wages. Therefore, those who have been responsible for adopting a policy which has not resulted in the stabilisation of the cost of living are fundamentally responsible for the increases in wages.
It is sometimes said that this situation has been brought about by the increase in personal consumption, but there again, if we examine the statistics, we find that that is not so. I admit that the increase in capital investment has been large but, in my view, and particularly after reading this morning's reports, it has not been large enough. When we make an analysis of capital investment, we find that in some respects the proportion of the national income which has been spent is far greater than it should have been, and that more should have been spent in the engineering and other industries of that kind which are capable of improving our position.
In my view, the greatest contribution towards the present inflationary situation has been the colossal military expenditure of £1,500 million a year. Some of us are in a very strong position in making this case, because we said the same thing at the time it was started. This country should never have embarked upon a colossal military expenditure of £1,500 million a year. It is more than the country can stand, it has been unfair to productive industry and unfair to the country as a whole, because, in compari-

son with other countries, our proportion of expenditure on armaments has been far higher. If anyone doubts that, I have the statistics here—and they have been obtained from official reports—to show that the percentage of our national income which we have spent on armaments is much higher than that of all other countries, with the single exception of the United States.
Those of us who hold this view have been fortified by what was said in this House on Friday, and I am very pleased to be able to find, in the speech which my right hon. Friend the Member for Easington (Mr. Shinwell) made, complete confirmation of the attitude which some of us took up six or seven years ago on this issue. I quote this passage:
But now I venture to go much further and suggest that we ought to abolish the Ministry of Supply altogether. … I suggest that each of the Service Departments individually—and also collectively as a result of co-ordination with the Ministry of Defence—could perform the tasks that now reside in the province of the Minister of Supply. … Let us abolish the Ministry of Supply.
My right hon. Friend then went on to say:
… The Service Departments have no inventory of the goods, stores, articles and weapons in their possession. … Out in the open there are hundreds, if not thousands of vehicles, tanks, armoured cars and the like which will never be used in any war, whether conventional or nuclear. … The fact is that the War Office do not know how much they have got. They do not know how wealthy they are. The same applies to the Admiralty and to the Royal Air Force, although not to the same degree.
One could go on quoting, but to make the point clear I will just add this from my right hon. Friend's speech. He was speaking about our requirements, and he said that the Minister of Defence asked his military advisers. He went on:
… his question to them was: 'What are your requirements, having regard to the risks that are implied in the present international situation?' What was their reply? It was not £3,600 million, nor £4,700 million, but £6,000 million."—[OFFICIAL REPORT, 20th April, 1956; Vol. 551, c. 1359–62.]
No one could produce a blacker indictment against those responsible for administering our military forces than that which is contained in the OFFICIAL REPORT of last Friday's debate. Therefore, I consider that, irrespective of the political party to which he belongs, it is the duty of every Member to see that in future we vote no more blank cheques.


The beginning of the voting of blank cheques for the Government took place, as I remember very well, at the beginning of the war in 1939. Prior to that, every Minister had to answer at that Box for the whole of the expenditure of his Department. Prior to that, all the Estimates had to be brought before the House, and they were carefully examined. After the war, we never got back to that policy, and blank cheque after blank cheque has been voted. In addition to that, we now consider a large number of Civil Estimates on one night and they go through very quickly. In my view, the time has arrived when it should be the duty of every Member to scrutinise all the Estimates.
It is now five o'clock, and, at the place where I used to be employed, 25,000 men and women will be pouring out of a works where they have been working since 7.30 this morning on piece work. They have been doing time-and-motion study and studying each operation. These are the men and women whose efforts are saving this country, who are creating the wealth of this country. Yet, for the past ten years, we have poured out from this House one blank cheque after another, and, while some of us have been suspicious about it, we hesitated to say so until we could prove it. Now, it is proved by the speech of my right hon. Friend on Friday, which was not the speech of a private Member of this House, but of a right hon. and respected Member who has been Minister of Defence and has had great experience.
I wish to make some constructive proposals. There ought to be an immediate cut of £300 million in expenditure on armaments. The Chancellor of the Exchequer should consider further cuts in the next financial year. If the statements made by my right hon. Friend the Member for Easington on Friday are correct, they are complete confirmation of our suspicion, and provide us with evidence of the need for a cut in expenditure of that kind.
We find in the Economic Survey of Europe that the defence expenditure, in millions of dollars at official exchange rates, expressed as a percentage of the gross national product, was, in the United Kingdom 8 per cent., plus the cost of two world wars with that enormous National Debt to which I have referred.

In France it was 7 per cent., in Italy 3 per cent., and in Belgium 4 per cent. The time has arrived when the United Kingdom percentage should be cut immediately to 7 per cent., and then, when we get an easement in tension, further cuts should be made as a result of that easement.
This country urgently needs a national plan, by which our resources should be used in the best interests of the nation. There is no sense of urgency in any political circles with regard to these proposals. While we mark time, the United States, the Soviet Union and Western Germany march forward at light infantry speed. Why have we not had a debate on the White Paper on Technical Education? For an indictment against our policy in this respect, I advise hon. Members to read the White Paper on an investigation into the recruitment of scientists and engineers into the engineering industry.
Why do we not reward our skilled craftsmen, development engineers and scientists better? I never thought that I should see the day when the home of the long out-of-date free trade would be demanding tariffs. I am not speaking critically of any constructive proposals. I respect people who make constructive proposals, even if they differ from mine. But the whole conception of free trade and tariffs is out of date. This country needs a mid-twentieth century policy to meet twentieth century needs, and that should be based upon planning and regulation.
We have never had a plan in Britain. It makes me smile when I hear some people talking about plans. I advise hon. Members to read Cmd. 7572, which says:
It is not a plan, but merely a tentative programme of national activity.
It is real planning that we require if we are to solve our economic problems. Therefore, I appeal for a twentieth century policy, a plan to make Great Britain greater, for the British to take the initiative at the United Nations with a world economic plan and for a large-scale expansion in world trade.
We plan at Fontainebleau. I have passed Fontainebleau and have seen the evidence of thousands of pounds being spent there. Yet we have never embarked upon an economic plan to meet the needs


of our industrial areas. We spend millions on military general staffs, but never a penny on economic general staffs. We prepare military plans to meet eventualities all over the world, but we prepare no economic plans to meet our own immediate problems. We have revitalised industrial areas all over the world, but we have not dealt with our own. Therefore, we urgently require a ministry of production and economic planning, a planning commission and a national investment council.
We have in this country some of the greatest engineers and scientists in the world, including Sir John Cockcroft, Sir Christopher Hinton and their associates, who are amongst the best-informed scientists in the world. That is an acknowledged fact throughout the world. They are adopting a twentieth century policy, and yet we in this Committee are playing about, as we have been doing this afternoon.
We need a policy for a dynamic democracy. We had such a policy during the war. The House of Commons gave a lead to the country. We put forward constructive proposals. There was no pettifogging quibbling such as we get all too frequently nowadays in a serious situation. The time has arrived again when this House should put forward constructive proposals. By all means let us differ from one another, but let us not keep sniping at each other and indulging in personalities. The only effect which that behaviour has on the people is to sicken and discourage them.
Such a policy as I advocate would bring about a great increase in productivity and wealth. I guarantee that the people would wholeheartedly support a constructive proposal of this kind, provided that there was equality in the distribution of wealth. Lord Keynes said:
I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment.
That was before the enormous expenditure on military equipment. If tension is eased throughout the world, what constructive proposals have we for dealing with the situation when expenditure on armaments stops? I believe it is along those lines that this country should take the initiative.
In my view, our affairs are being managed as they were during the Industrial Revolution. No political party in Britain has yet adopted a twentieth century policy to meet twentieth century needs. Such a policy is urgently required. I hope that the party to which I belong will adopt this policy. If the party opposite is to continue in office for a further three years, this country will be travelling along the road to ruin, and that is the situation which we shall face when we again take office. Since 1945 we have maintained full employment because of the world needs, because of the regulation of our economy by the Labour Government, and devaluation. Superimposed on that has been the colossal expenditure on armaments. That is the road to ruin. It is time that we insisted on a constructive policy to meet twentieth century needs.

5.8 p.m.

Mr. Edward du Cann: I have the honour to represent the ancient and historic constituency of Taunton, in the County of Somerset, which comprises not only the Boroughs of Taunton and Wellington but also their rural districts and the rural district of Dulverton, and which includes some of the most beautiful countryside in Somerset, if not in the whole country.
The industries in my constituency are many and varied. They range from the production of cider—fortunately not affected by the proposals of the Chancellor of the Exchequer, or perhaps I should make a speech rather different from that which I am now about to deliver—to the textile trade; from the manufacture of gloves, shirts and collars to the manufacture of precision instruments; from engineering to withy growing.
Taunton market is the finest in the West, and the largest single industry in the constituency is farming. Therefore, not only do we earn foreign currency by our work in this constituency, but we also save foreign currency as well. Perhaps I may say, in parenthesis, that one must recognise that for all the support which the farming industry is receiving at the moment from the taxpayer, small farmers and hill farmers particularly eke out a not very satisfactory living.
The division has been represented in this House by many distinguished men,


although it failed to elect the great Mr. Disraeli when he stood as a Tory candidate at a by-election in 1835. Not least among those distinguished men has been my immediate predecessor, Lord Colyton, to whom I owe a great deal—far more than I shall ever be able to repay. I see the hon. Member for Shoreditch and Finsbury (Mr. Collins) in his place, and perhaps I may say that both he and my predecessor the noble Lord represented Taunton with distinction and rendered great service to their constituents. They have both set me a hard example to follow, and I shall do my best to follow it.
I confess to being in some difficulty in addressing the Committee today because, on the one hand, I understand that by the tradition of this House a maiden speech may not be contentious, but, on the other hand, I recall the turbulent history of the West Country. Names like Monmouth and Judge Jeffreys come to my mind. Perhaps it is just as well that the hon. Member for Nelson and Colne (Mr. S. Silverman) is not in his place. So we in the West Country are rebels yet, and suffer no Government gladly, particularly when they have their hands in our pockets in which we keep our loose change.
For all that, it is true to say that my constituents and the majority of the people of this country support my right hon. Friend the Chancellor of the Exchequer in his grand design and aim to contain inflation, to encourage private, and more particularly Government, saving, to keep Britain solvent and to build up our reserves and keep us paying our way. We recognise, too, that if these things are done we are certain to maintain our standard of living and, perhaps, in the future to build it up. If these things are not done, we shall perish and the result will be tragedy for our people.
It is with regard to the methods by which my right hon. Friend seeks to attain these aims that there may be differences of opinion. As to the detail of his Budget, I wish to refer, first, to the sensational announcement—for it is that—about the new Premium Bonds and then later to other matters.
We shall have to wait for details of the Premium Bonds scheme, but it is is, perhaps, appropriate to make four points. The first is, that it is clear that the public imagination has been caught by the idea.

That augurs well for its success. It seems to me important, if it can be arranged—as I have said, we do not know the details at the moment—to start the scheme as early as possible. I hope very much that we shall not be kept waiting for as long as my right hon. Friend suggested.
Secondly, when we have secured the interest of the people, we surely want to maintain it. It occurred to me that it would, perhaps, be better to draw these bonds every month instead of every three months.
Thirdly, my right hon. Friend announced that the bonds would have a par value of £1 and that the maximum holding would be limited to £250. I agree with the figure suggested for the holding, but I am not so sure about the par value. At a time when investments tend to be cheaper so far as their par value is concerned in order to encourage working and middle-class people to buy them, it seems to me that it would be better to reduce the par value to 10s. or 5s. One recognises the difficulty when a great investment company like Cable and Wireless has to do that in order to attract investors. Therefore, it seems to me important to make the point here today.
Lastly, bearing in mind a letter in The Times on Friday last which quoted a precedent in Queen Anne's day, it seems to me that my right hon. Friend might be able to get over the objections of some people—one can sympathise with and understand them—to the speculative nature of these bonds if some small rate of interest were paid on them. The net rate to be paid is 4 per cent. and if we gross it up it is about 7 per cent., which is a very high yield when compared with the ordinary share yield index quoted in the Financial Times, which is just about 5½ per cent. Surely 1 per cent. could be paid on these bonds, since my right hon. Friend has said that registers are to be kept.
Leaving the subject of the Premium Bonds, I should like to say that I have—and I know that my constituents have—followed the Chancellor's reasoning when he says, in effect, that this is to be a "hold-the-fort" Budget and that there could be no tax concessions this time. We are also pleased that no severe increase in taxation has been imposed either.
I should like to register a point for the next time, and talk about two sections of the community, those who receive the most and those who receive the least—the Surtax payers and the old-age pensioners. I am, clearly, not an old-age pensioner, though, pray God, I may be one day, and neither am I a Surtax payer.
The present initial level for Surtax is the same as it was in 1928–29, and if we take account of the fall in the value of money, it would appear, bearing in mind current values, that Surtax begins at a level of about £600 or £700. In these days, when the middle-class is expanding so fast—and we welcome that expansion—it is surely illogical and out of date to keep the lower limit at that figure.
I am not suggesting that one should not recognise the social purposes of taxation, as the right hon. Member for Huyton (Mr. H. Wilson) mentioned in his speech, nor am I suggesting that we should not keep the upper limits of Surtax high. I am talking about the middle ranges of Surtax. We must surely recognise that Income Tax and Surtax discourage the people with special skills and trades. They discourage, too, the young and rising managers and executives. They stultify endeavour and kill incentive, and they are morally bad in the sense that they encourage the payer of Income Tax and Surtax to look for his remuneration in indirect ways.
As to the old-age pensioners—I am sure that my right hon. Friend bears their needs very much in mind—much has been done for them, not least by the present Administration. I think that is a fair point to make, but much more needs to be done for them. On the subject of the tobacco concession, I have found among my constituents dissatisfaction, not because the concession has not been increased by 2d., but because the concession exists at all. Many think that it would be much better to give all old-age pensioners an extra 2s. 6d. a week rather than give one section an extra benefit. Although 50 per cent. of old-age pensioners take advantage of the tobacco concession, one does not know how many of them are habitual smokers. It would be fairer to give the 2s. 6d., or whatever the sum may be, to all of them.
Another point which has been put to me very strongly, and with which I strongly sympathise, is that it would be a great aid for the old people if something were done to raise the earnings limit for them. I know that that is a matter which is being investigated at the present time.
Finally, I hope and believe that my right hon. Friend's language in his Budget speech gives great cause for hope that his second Budget may implement the promise of his first, and that when inflation is mastered and our trade position in the world improves, as we pray may be the case, we may look forward to enjoying the great tax reforms and reliefs of which our heavily burdened nation stands so sorely in need.

5.19 p.m.

Mr. Victor Collins: It is a very great privilege to have the opportunity of congratulating an hon. Member of this House when he makes his maiden speech. In my case, it is a rare and almost a unique pleasure because when I had the opportunity of making my maiden speech about eleven years ago, it was as the hon. Member for Taunton.
The hon. Member for Taunton (Mr. du Cann) was very kind in his reference to myself. I have considerable pleasure in saying a few words of congratulation because I am sure that he has impressed the whole Committee by his fluency, his lucidity and the confidence which he showed and which at least, on a former occasion, whether I displayed it or not, was unable to feel. I was warmed by his references to the industries and history of the area he represents, because no one who has had the privilege of serving the warm-hearted West Country folk can ever fail to have their welfare continually at heart. I am sure that all hon. Members, and I in particular, will look forward to more contributions from the hon. Gentleman.
This Budget should be judged by its effect on production in field, mine and factory. I think sometimes that although civil servants and Members of Parliament, and indeed, Chancellors of the Exchequer, are necessary people, we are not essential in the sense that people who produce our wealth are essential. The majority of hon. Members on this side of the Committee have had actual experience in these fields in one way or an-


either manual, technical or in management. But that position does not obtain other, among hon. Members on the Government benches. Very few of them have had manual or technical experience and I am afraid that surprisingly few have up-to-date active experience in management. Were it otherwise, we should not have had many of the proposals which have been put forward in the past five years.
I intend to make my observations from the point of view of one who is actively engaged in manufacturing and also who has for many years farmed on a small scale. I had assumed that the Budget proposals would be another instalment of the Government's plans to counter inflation which to a large extent they have created, and an attempt to iron out the disequilibrium in our balance of payments which to a large measure has been caused by their policies. But the Budget proposals are not an instalment of those plans, but a standstill. As has been said, the Economic Survey of the Chancellor condemns the proposals of his predecessor. This "no change" Budget commends him.
This standstill may mean that the Chancellor has realised the simple fact that if industry is to expand it must be able to plan ahead in the knowledge that its plans will not be frustrated by arbitrary or panic changes in Government policy. People are not machines. They cannot be sacked and reemployed like turning on a tap. They are human beings and will give of their best only when they feel that they belong to an organisation. It is impossible to get the best out of people who are being continually pushed around. Ever since February of last year the Government have been blowing hot and cold. There has been drastic action and gloomy forecasts alternating with largesse and hopeful prophecies. Now it would seem that, except at the Box, the Chancellor is not blowing at all.
Perhaps the right hon. Gentleman has realised that the country is adult and that people should not be treated as children. But we recall the right hon. Gentleman's pre-Budget hints of stronger remedies, and now we find that he was thinking only of strong cider. Instead of vague talk about another committee, why not instruct the Board of Trade to call

in industries one by one for joint consultation? The right hon. Gentleman should tell them what their level of production should be over the next two years, and how much must be exported. He should ask industries for their help in curtailing imports. We should then know what were the tasks and what labour force was needed; and we could get down to the job of putting the country on its feet. This present uncertainty which keeps men "poodling" along on short-time, hoping that things will improve, is costly both to management and the country.
The Chancellor must make up his mind whether he or the local bank manager is to decide the future of the nation. At present it is far from clear. I would draw the attention of the right hon. Gentleman to paragraph 28 of the White Paper on the Economic Implications of Full Employment, where the Prime Minister rightly states that
the healthy functioning of the economy and the progressive growth of output depend on an enlightened and efficient system of industrial relations with industry.
He adds that
it demands a full and frank exchange of opinion and information at all levels between representatives who have confidence in each other's competence and integrity. If there is not this confidence, the resulting discontent and friction will impede production and hamper exports.
That is all so very true as to be a platitude. But does it not occur to the Government and to the Chancellor that the Government are a third partner in this effort, and that by destroying the confidence of both sides of industry, as I can assure the right hon. Gentleman that he is doing, he is not only impeding production, but destroying our hopes of recovery?
I ask the Committee to consider a few examples of the way in which, over the last four years, the Government have increased prices and thereby hampered exports, as a matter of policy; or have first stimulated demand and then cut consumption, and thereby created undeserved unemployment and short-time working. At the time of the General Election they told the people that they would cut the cost of living. They put it up by 23 per cent. They exhorted the housewife to buy less, but at the same time allowed millions of pounds to be spent on commercial television programmes by which housewives are constantly urged to buy


more. They spent millions of public money in starting that same commercial television and then put up the initial hire-purchase deposit to 50 per cent. so that people were unable to buy television sets to watch the programmes.
The Government urged the trade unions to exercise wage restraint and, at the same time, made restraint impossible through increases in the price of bread, milk and sugar, and scores of household necessities. Here, in this Budget, we have an increase in the price of two things which affect most people, cigarettes and bread, which is a further instalment of inflation. During the General Election the Government urged people to "Invest in Success". When people had bought Government stocks the Government manipulated the rates of interest so that they lost about 15 per cent. of their money. People were told that in a property-owning democracy they should buy their own homes. But the Government then put on a credit squeeze to such an extent that many building societies could not lend people the money to buy their homes. A minor adjustment of the Stamp Duty, as is proposed in the Budget, will not put that right.
The Government urged motor manufacturers to build more cars and then arranged credit conditions so that those cars cannot be sold. The country was told that we must close the trade gap between what we sell and what we buy from abroad, and then the Government allowed the unrestricted import of luxury foods and drinks, toys, machinery and all sorts of manufactured goods. The Chancellor gives no hint whatever in his Budget of any action to stop this flood.
Manufacturers were told that the one chance for the country was that we should work harder and increase productivity. Then the Government forced the banks to squeeze manufacturers so hard that they had to cut down on all expansion, mechanisation and manpower. In particular, after telling the world that they support the small man, the Government have throttled his credit until bankruptcies constantly increase in number.
That is, in my view, a selective but completely accurate account of some of the steps which this Government have taken, and the effects of their actions are only beginning to be felt. If a private

person had done half the things which this Government have done, he would be in a mental home. It seems incredible to me that any Government which calls itself a Conservative Government and draws a large measure of its support from management and industry should do such foolish things as those which I have illustrated. Because I believe that these actions spring from a doctrinaire Tory policy I urge the Chancellor to depart from that.
The credit squeeze and dear money may close the trade gap, but only by inflicting heavy and indiscriminate suffering on certain industries and groups of workers who have done nothing to deserve it; and in the process I believe they may inflict real damage on the country. What they will not do is to stop the ever-mounting inflation. On the contrary, in many directions it is demonstrably adding to inflation.
If investment, production, consumption and employment are to be cut we should make the cuts where they are necessary in the interests of the country—if such cuts are inevitable. We should expand production and not talk about cuts. Let us abandon this blunt instrument, the credit squeeze, which is curtailing production, even in basic industries, and is making it harder, if not impossible, for people to get decent homes to live in.
The proposed changes in the methods of financing the nationalised industries are commendable, but why do we continue to permit luxury imports and luxury industries to expand without limit? If the Chancellor seriously hopes to cut expenditure by £100 million why does he not look at the hundreds of millions of pounds of taxpayers' money going on agricultural subsidies, which so far as I can see, benefit neither the farmers nor the consumers. The right hon. Gentleman has announced no substantial change in that direction, apart from the cuts made in the bread and milk subsidies before the Budget, and now the final abolition of the bread subsidy. These cuts will be passed on to the consumer as higher prices.

Captain J. A. L. Duncan: Does the hon. Gentleman advocate further cuts in agricultural subsidies?

Mr. Collins: I shall be glad if the hon. and gallant Gentleman will allow me to make my speech, and he will see exactly what I do propose.
I ask the Chancellor to consider the difference between the subsidies which the taxpayer had to provide under the Labour Government and those which he is paying now. I would remind the Chancellor that in the 1950–51 Budget, the last Budget for which Sir Stafford Cripps was responsible, subsidies, excluding production grants, totalled £403 million.
Every penny of this sum was used to reduce the actual price to the housewife. She was able to buy meat, bacon, eggs, butter, cheese, milk, bread, cereals, sugar, tea and a lot of other commodities at lower prices than we paid to the farmer or to the foreign producer. In fact, a note attached to the Ministry of Food Estimates stated that the sum of £385 million represented
the difference between the selling price of commodities and their cost to the Ministry (including expenditure on distribution) the deficiency being incurred in order to implement the cost-of-living subsidisation policy.
We paid £403 million, and all of it was used directly to reduce the final price of foodstuffs.
The farmer was all right because he had a guaranteed price. The housewife was all right because she paid a lower price. Employers and workers were all right because, by that amount, inflation was checked and prices were lower than they otherwise would have been. The taxpayer was not so happy at footing a bill for over £400 million, but he could see the sense of it. He cannot see the sense of the present position.
I would invite the Chancellor to look at the subsidy position now, after four years of removing subsidies altogether. We could expect the cost to the taxpayer to be almost nothing, but in the last ordinary Budget the subsidies, again excluding production grants, totalled the nice, handy sum of £231 million, compared with £400 million. I would ask the right hon. Gentleman to look at what the various parties get out of that £231 million. Out of the £231 million only the bread and milk subsidies, totalling £72 million, were used directly in the reduction of final prices to the housewife. We know, of course, that she is paying more for her milk and bread than she did in

1950, but at least the £72 million did mean lower prices.
Who benefits from the other £160 million, the difference between £231 million and £72 million? It is not the housewife. She does not benefit because she has lost her subsidies, except the two that I have mentioned. In fact, she is paying higher prices on foodstuffs to the extent of 6s. in the £ compared with 1951. That is an increase far greater than all the subsidies which Sir Stafford Cripps imposed in 1950.
Who is getting the £160 million? I ask the question, and I hope that the Chancellor will be able to answer it. I have not had an answer from the Government yet. In the past the farmer had a guaranteed price. He has lost it, and now he does not know what price he is going to get. Farm incomes last year were about the same in terms of money as in 1950 but in terms of purchasing power they were 25 per cent. less, because the 1950 £ has been reduced by that amount. The farmer is far worse off, and he is very busy telling the country so in no uncertain voice.
On this point let me quote from the British Farmer which, as the Chancellor of the Exchequer may know, is the journal of the National Farmers' Union, which could not be described as a Socialist organisation. It is stated in its issue of 3rd March:
The kindest criticism of the Government's palliatives for Britain's inflationary troubles, is that they lack imagination and the positive approach. They are, in fact, the mixture as before. The Chancellor diagnoses an economic ulcer—and reaches for the bicarbonate.
The farmer is not getting a penny of this £160 million of the taxpayers' money.
There is only one section of the community left, and that is the middlemen—the millers, the importers, the dealers—the people whom the Government let loose to do their worst when they scrapped control over imports and prices, and when they went as far as they could to end bulk buying. These people are responsible for increasing the price of foods by 6s. in the £. The Government may argue that before the war we were at the mercy of these same people, and that is so, but before the war we did not also give them a nice fat bonus in the shape of £160 million of the taxpayers' money.
I assure the Chancellor that I have been scrupulously fair in my selection of figures. I have gone through the accepted Estimates very carefully and have compared like with like. I do not think that my figures can be challenged. I accuse the Government not only of deliberately causing inflation by the abandonment of controls and the destruction of the Agriculture Act, 1947, whatever lip service they pay to the agricultural industry and the farmer. I also accuse them of robbing the taxpayer of £160 million in order to gratify and enrich the middlemen and merchants who are their staunch political supporters. Of all the crimes committed against the nation by the Tories since 1951, that is the greatest.
I ask the Chancellor and the Committee to consider just what could be done in relief of taxation or in necessary expenditure on welfare with that £160 million. Most of the things have been or will be suggested to the right hon. Gentleman. It would be much better to spend that money, as in the days of the Labour Government, in reducing prices to the consumer and making sure that the farmers' position is secure. That is the only way I can see. It would give the right hon. Gentleman the opportunity to prevent considerable unemployment and short-time working, and would be a major check, which is so badly needed, to the constantly ascending wage-price spiral.
We must have this check. The country must have a breathing space. We must have a considered plan for industry. It is the duty of the Government to provide all three. Instead, we have had a Budget which does none of these things, a Budget of interest not for what is in it but for what is not in it. I urge the Chancellor to be deaf to doctrinaire suggestions coming from the benches behind him, and to act in the interests of the country before it is too late.

5.40 p.m.

Viscount Lambton: We have heard a very remarkable speech from the hon. Member for Shoreditch and Finsbury (Mr. Collins). It was remarkable for two things. One was the flattest joke that I have ever heard in the House of Commons. It sank like a stone to the bottom, and I hope it will not be remembered.
The second remarkable thing was the hon. Member's curious arguments about agriculture. We have a confused impression from what he said. He told us that he did not agree for a moment with subsidies for agriculture, and then, after a long rigmarole, one found that he agreed with subsidies which would benefit the consumer. Generally speaking, one got very little impression that the hon. Member was conveying any of the plans about which he spoke. Perhaps he was qualifying his remarks when he said how selective he was being.
We have had a Budget which has received a certain amout of criticism from hon. Members opposite, but not nearly so much as one might have expected. I find considerable reason for supporting it, especially upon the point which has excited so much interest in the country, and which will, I am sure, be a conspicuous success in achieving its object, which is that of saving by means of a Premium Bond.
While the Chancellor has not quite given the benefits to the middle class which I had hoped he would, one can only hope that the improving financial position resulting from the steps taken last autumn and this year will result in a favourable climate to enable him to bring those benefits about at the beginning of next year.
In the main, the Budget was an attempt to deal with the present situation. While I believe that in that respect it will be successful, I think it is dangerous—the modern trend is dangerous—for every Budget to be planned to deal only with the financial problems which arise each year. It may well be that if we do not look further ahead into the future, problems will arise which will overwhelm us unless we prepare to face them now. The country will enter, within a decade or two, a declining period of prosperity, and we shall leave to the next generation a legacy of recurring crises and unfaced problems.
Nobody can be satisfied with our total expenditure and the great strain which it puts on our economy. I should like to deal with two aspects of this expenditure, first, defence. We have been told that the expenditure upon defence last year was £1,500 million. That is a great sum. It hardly needs stressing that it makes a


considerable hole into the pocket of every taxpayer.
However, to me and, I think, to many hon. Members on both sides of the Committee, the dangerous part of it is that the results of this expenditure and of previous expenditure during our previous period of office and of that of the Labour Government do not in any way leave us prepared for war. We are trying to build up a skeleton force which can be magnified in the event of war into a larger fighting unit.
The defence expenditure in 1938 was £256 million—I give this comparison to show the difference between the expenditure in peace-time and war-time—while in 1944 it had risen to £5,000 million, or twenty times the pre-war figure. I do not wish to argue that in the event of war today we should have to spend twenty times as much as we are spending at present, for I think we are now stronger and more prepared compared with our position in 1938. Yet our forces at the moment are only just adequate to meet our commitments.
I do not think that the Committee has realised—certainly the country has not—the enormous loss represented to the overall strength of this country by the fact that the Indian Army is not now available. At any rate, if there was a war at present a certain amount of expansion would be inevitable. The terrifying thing is that we could not afford to expand. To spend four times our present sum would leave the country virtually bankrupt. There is no hope of being able to raise any sum of money to put under modern arms a force comparable with our late effort.
We should look most carefully at the sums of money being spent at present in this way and see whether there is anywhere any possibility of reduction. The most successful means of economy would be if the present plans of the Minister of Defence were carried out and the every-man period of service were abolished as soon as possible. I hope that if the Minister of Defence is not successful in his present recruiting campaign, the Chancellor will be even more generous with him to enable him to build up a large standing force which will be an economy in the long run and allow us to do away with conscription, which is not only chasing

a shadow but causes considerable disturbance in industry and the lives of the people.
There may be hon. Friends of mine who disagree, but I can only repeat that I think it would be a grave mistake to go on building up a shadow force which our finances could never afford to build into a reality. While it may be said that America would come to our aid, I do not think that in modern conditions we could reorganise our forces and take advantage of this aid quickly enough to stem the tide of a war, which, after all, will probably be of a totally different character from anything that we have previously known.
To turn from finance to a much more domestic issue—I hope that certain hon. Members opposite will listen carefully to what I have to say—I was slightly disturbed to hear that the Chancellor did not regret more strongly the rise in the cost of the social services. I know that this is a subject about which hon. Members opposite feel most strongly, and I am not speaking in any cantankerous or old-fashioned Conservative tone, but I do not see how we can fail to ignore very much longer the unfortunate economic results which the changing age of our population will inevitably bring in the next twenty-five years.
At present, we are spending about £465 million a year on retirement pensions and, apart from the money spent by local authorities, about £380 million on education. This represents a very considerable burden to bear, but one which is at the moment within the grasp of the financial ability of the country and one which—I say it sincerely—we should all like to maintain. Conditions in the future, however, will not be as easy as they are today.
Whereas there are now 4½ million old-age pensioners, this figure will rise within twenty-five years to approximately 10 million, while at the other end of the scale, whereas now we have 7½ million children of educable age between five and fifteen, they will have increased in the 1970s to close on 10 million. At the same time, and bearing the weight of this support, the prime producers of the country—those of working age between 19 and 65—will remain static at almost exactly the same number as they are today. It is a matter for considerable alarm that the


same number of producers should have to support another 5½ million old-age pensioners and between 2 and 2½ million more children.
Neither should it be forgotten that with the increase in the number of old-age pensioners, expenditure on the health bill will almost inevitably increase, while family allowances, by the mere weight of the numbers of children, will also account for a bigger contribution. By the middle 1970s, therefore, the cost of the social services will be running not at their present rate but, without taking into consideration the impetus of inflation, at the rate of £3,000 million a year.
The country's present producers—that is, mainly those of us in the House of Commons today and the age group between 19 and 65—will be the old-age pensioners of the future—and we should consider what are the dangers to which our present prodigality is giving rise. It would be a great pity if this generation were to find that by thinking only of itself and the present, it was placing an intolerable burden upon the next generation who, as I have tried to show, will have to support twice as many old-age pensioners and a quarter more additional children.
Therefore, those hon. Members who refuse any interference in or any amelioration of the social services, may be regarded not as the guardians of the public good, as they are at the moment, but in a quite different way by their successors upon whom they lay a very heavy burden.

Mr. Arthur Palmer: Is the noble Lord taking into account the natural increase in the national product over this period?

Viscount Lambton: Yes, but one cannot depend absolutely upon that. I suggest that we are not allowing sufficient margin for safety. During the last few years we have had very advantageous terms of trade, and I do not consider that by the expenditure which will be laid upon the next generation we are allowing that generation sufficient margin for safety to combat bad trade conditions which might reign.
I hope very much that my right hon. Friend the Chancellor of the Exchequer will consider the raising of the age of qualification for retirement pension in certain cases. At the moment, I do not

see how we can argue that a man who has spent his life in the comparative peace and quiet of an office is as needful of an old-age pension at the same age as a manual worker from the coal mines or dockyards. Quite apart from this, I should have thought that the possibility of variation of choice would also have been considered, and that if people did not wish to take their pension until a later age they might have an increase in the eventual rate of payment when finally taking their pension.

Mr. J. T. Price: Surely the noble Lord is forgetting the terms of the Statute upon which National Insurance is administered. Any insured person can work beyond the statutory age of 65 and obtain a pension increased actuarially according to the number of years he has remained at work.

Viscount Lambton: I am asking for far greater use of that idea. I agree that the position to which the hon. Member refers is covered in certain instances, but the encouragement of the idea has not been sufficiently put forward and is not fully realised in many industries. I hope that it will be stressed.

Mr. Price: Surely the noble Lord is labouring under a grave misapprehension. Six out of every ten people over the age of 65 are still gainfully employed.

Viscount Lambton: I readily concede the point of the hon. Member's intervention, and I hope that the general idea will receive greater encouragement, especially in the Civil Service.
It cannot be denied that the social services are fulfilling their purpose and that, generally speaking, the nation is stronger and better educated and that the working ability of everybody has been prolonged. I hope, therefore, that the Chancellor will consider my suggestions and that an eventual prolongation of the age of retirement will be seriously considered. It is very unwise indeed for the present generation to lay such an extraordinarily heavy burden upon those who will be the working population in twenty-five years' time. While progress may sound splendid at the moment, we are laying upon those of the future a great social weight of dependence which may well be almost too heavy for them to bear.

5.58 p.m.

Mr. H. Rhodes: I hope that the noble Lord the Member for Berwick-upon-Tweed (Viscount Lambton) will excuse me if I do not follow his interesting speech in detail, except to say that his proposal for the continuation of old people in employment is conditioned by employment being available. One of the principal defects in his party's present policy is that it is actually squeezing out the older people who are either doing part-time work or are engaged in full-time employment. In my experience, that is happening all over Lancashire and Yorkshire.
A good many statistics and percentages have been quoted and argued in this debate, and I do not propose to contribute to their number, but I would quote an old lady I know who keeps an establishment in a village near the place where I live. She is an expert on percentages. I asked her the other week how she was getting on, and she replied, "I am doing well. I make 1 per cent. profit. I am not like those people who make 5 per cent. You see, if I buy something for 1d. and sell it for 2d., I am perfectly happy."
When I got up this morning and looked out of the window I saw the fast train coming from Manchester and going towards Huddersfield. It was swaying along at about 30 miles an hour. The engine was about sixty or seventy years old. It was covering the valley with thick smoke, blanketing it. It comes along every morning. In recent weeks we have given it a name. We call it "Old Credit Squeeze", because it looks as if it is out of control when it passes us, and we always have a feeling that perhaps it will not arrive at Huddersfield, where it is going. That old engine is rather a figure of fun. It has done a grand job in the past, but it is now ready for the scrap heap. It fills the valley with smoke so one cannot see the nice things, although, of course, it hides the ugly things as well. Indeed, while the smoke is pouring out of it nobody can find his way about.
After contemplating that I went to the mill at starting time and saw the steel structure going up for the extension of my establishment. In the cool of the morning I reflected a bit on what that meant. I remembered the time when I ordered that steel for that structure. By

the way, it is very nice steel, and it all fits. I asked for three quotations. Two which came in were the same. The third was a bit lower. We told him, "The job is yours." "Oh," he said, "but we have made a mistake. We find that we have omitted to charge for the gutters." When the revised tender came in it was just about the same as the others, to within a pound or two.
Machinery is going in, and it needs a commodity known as card clothing, which is very expensive. It costs £1,000 to clothe one machine with card clothing. One can get half a dozen quotations for it, and they will all be the same within a few shillings. We made plans to increase our factories to provide productive capacity to match our trade demands. This year, for the first time since the war, we are able to compete with the very finest Italian makers. Thus, we are saving imports. The import trade has grown because the Italian makers enjoy some advantages we do not. We have committed ourselves with a programme for many years, and it is now bearing fruit. I want to ask the Government a question about this.
According to the Chancellor and the Tory Party the fact that we have expanded and put in new machinery makes us as blameworthy this year. But what about those who have allowed their plant to become out of date, who have pocketed their profits and done nothing whatever to forge a more competitive weapon? I agree with my hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) that it is time that we in industry had some information about what the Government want, and what they intend to do, what level of unemployment they are aiming at and how many people they want to switch from one job to another or from one industry to another. All that is very well in theory, but many of those folk are not too young, and they cannot move from one district to another. That proposition is not as easy to carry out as, perhaps, anyone sitting in Whitehall may make it out to be.
I want to ask the Government another question. I set off from the mill to catch the train, and I called at a garage en route, as I usually do. The people who own it are hard working, and they have tried desperately over the years to make a go of it, and they have done so. All


credit to them. Within a couple of hundred yards of that garage there is going up an edifice which, in my estimation, will probably cost as much as £10,000.
The Economic Secretary today talked about certain conditions to be fulfilled to get the approval of the Capital Issues Committee to new issues. He was talking about issues for £50,000. The question I want to ask is: do the same circumstances he laid down apply to £10,000 as well, namely, the fact that a building was arranged for before the application to the Capital Issues Committee?

Sir E. Boyle: In cases where the application is for £50,000 or more the fact that a contract was previously entered into cannot be brought into the argument, but in cases where the borrowing is for less than £50,000 it can be brought into the argument. Does that answer the hon. Gentleman's question?

Mr. Rhodes: That is just what I wanted to know. There was an argument about the benefit that might accrue to this country through the issue of capital. That is correct, is it not?

Sir E. Boyle: The C.I.C. acts in accordance with directives it receives from the Chancellor. I cannot put it mare precisely than that.

Mr. Rhodes: That is just what I wanted to know.
The new garage, going up next door to the one which has been there for some years, is being built by one of the large oil companies. Suppose those lads, who have for years been trying to make a go of their garage, wanted to set up a garage in another village. They would have to go to the Capital Issues Committee if they wanted a new issue. The argument is that the C.I.C. must act according to directives given to it.
It is grossly unfair that out of the assembled reserves which the oil companies possess they should, because they want to run those lads out of business, be able to erect a garage there, where another garage is not wanted, anyhow. It is unfair that they should be able to use all those bricks, all that mortar and steel, all those slates and the rest, without any sort of control by the Government over the

use of those physical resources. When talking about discrimination in how the investment of the country should be directed, let them remember that, because that sort of thing is happening in many places today; and it cannot be laughed off.

Mr. J. T. Price: May I say, in support of what my hon. Friend is now saying, that there is precisely the same situation in three separate parts of my constituency at this moment. Honest-to-goodness traders who have built up business are being run off the road by the establishment of great new garages which are not needed for the economy of the country at this time.

Mr. Rhodes: There are dozens of such instances; it is not unique. These instances of the misdirection of investment can be multiplied many times. I am very glad that the Economic Secretary gave me that piece of information.
There is another question I would ask the Chancellor. Does he think that without paying regard to the moral side of the issue, as mentioned by my right hon. Friend the Member for Huyton (Mr. H. Wilson) last Wednesday, we can ever get by in the difficult state we are in? I will put it in this way. None of us, on either side of the Committee, wants to see a wage structure, with direction of labour, with full rationing, with all the implications such things bring, even if it were to give the stable economy and ability to have balance of payments that we so vitally need. But are the Government so sure of themselves in believing that they have an answer that will enable the country to get on its feet in time to save the situation?
Is the Chancellor so sure that the fumbling, unsure remedies he has proposed in his Budget speech will do the trick? Or does he not think that somewhere in between there is a compromise, using, in addition, controls that will help? To show how indecisive the Chancellor was on this matter, let me quote just one or two short passages from his Budget speech. He said:
The economy is still running at a very high level. But I think we have learned this lesson from the events of the past year. We cannot afford to run our economy flat out, with more jobs than men to fill them".
A little later on he said—and I do not blame him for it; it is up to him to


enthuse and get people in the country to back him if he can—
We must all be expansionists, but expansionists of real wealth
Does the Economic Secretary think that the activities on the Stock Exchange last year, as we knew them, were flat out for the benefit of the country? Can we afford to have that sort of thing flat out? Were the activities of the Stock Exchange last years producers of real wealth? May I remind him that in October, 1950, John Summers shares were sold to the public at 34s. 6d. In the company's last annual report, just before Christmas last year, they were quoted at 68s.
Is that the creation of real wealth? It is the creation of inflation such as we have never seen before. It is, as my right hon. Friend the Member for North Battersea (Mr. Jay) was explaining in his splendid speech, another attempt on behalf of the old class of privileged people quickly to regain some of their advantage.
The Chancellor went on to say, speaking about increasing production:
The only question is at what rate, for what market, and how best guided our expansion is to be.
Then he completely goes off the subject and quotes from Macaulay's Essays; but that is the question we are asking. Can democracy do its job within its present framework and with its present remedies as propounded by this Government? That is the question that the whole country and the free world are asking.
I remember being at an interview with General MacArthur, who was at that dime G.O.C. in Japan. He was asked, "What do you think is the future of Japan? What sort of economic future has Japan got?" He replied, "I have sent back to America James S. Killen, who has gone to interview people in commerce, industry and insurance, economists, and university professors. I have ordered him to come back with a plan whereby we can have a perfect balance between capital, labour and the consumer".
Is it not wonderful? That sort of talk is the sort of thing we find in the Chancellor's Budget speech: The right hon. Gentleman said:
… we shall need, as our fathers before us, prudence and daring—in the right proportions—and above all, the instinctive judgment as to the right policy at any moment and the courage to apply it.

Just before that, when talking about the measures which had been taken to combat inflation, he had said:
They have all been discussed at length in this House, I think only six weeks ago. These measures took longer to act than we expected. They had to be—and they were—continually reinforced.
As another example of the Chancellor's uncertainty, I will quote another short passage from another part of his speech:
Have we done enough. Is the trend in demand already changing? Can the measures which we have taken be relied upon to overcome inflation?".
Then he goes off to something else; he should answer it, but he does not. He says:
We cannot, therefore, say with any certainty that we are definitely moving in the direction in which we must go".—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 869]
Then he says:
We have learned only too readily how to turn the taps on. Even Lord Keynes never told us how to turn them off a bit"—[OFFICIAL REPORT. 17th April, 1956; Vol. 551, c. 855–871.]
It is all uncertainty. We do not know. What I particularly ask the Economic Secretary and the Chancellor of the Exchequer to pay heed to is getting more certainty in the information which is supplied to them. I have had this in mind for a long time, and I was glad that the Chancellor mentioned it during his Budget speech. Unless we can evolve with more certainty a method whereby we take action against inflation at shorter notice, with more certain results than we see now, then I myself think that our democracy will founder.
Now for a few moments I want to deal with the other aspect of the credit squeeze overseas. During the visit of a Parliamentary delegation to Western Nigeria, I sat opposite the Prime Minister, Mr. Awolowo on one occasion at a luncheon. The delegation had been asking the Prime Minister many questions and after about an hour's discussion Mr. Awolowo said, "The British people have encouraged us to develop from a near-primitive state. They have encouraged us to accept their system of government. They have encouraged us to look forward to independence and to taking upon ourselves the responsibility of government, but at the moment when we are ready to assume that responsibility we cannot get capital."
When the Bank Rate is 5½ per cent., credit for the Colonies and the Commonwealth is hard to come by. They can scarcely secure it at any price, and the Prime Minister of Western Nigeria was ready to set off on a journey to London, Ottawa, Washington, Rome, and Tokio. He may well be back by now.
I do not know what success Mr. Awolowo had, but at least he has made an effort to raise capital outside Nigeria. That is not surprising when, as my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) said, the amount of capital invested in the Commonwealth by the United Kingdom in 1954 Was £223 million, but in 1955 was only £4 million. That does not give much support to the Colonial Secretary in his work in these days, when the commodity markets are so shaky.
I have no time now to develop the subject of commodity markets and their effects upon the economies of the African countries. Nevertheless, these effects are sufficiently important for the Government to take serious note and examine for themselves what is happening today in the commodity markets. Northern Nigeria is very dependent for its livelihood upon its cotton exports and even now, when short time is being worked in Lancashire, we could use twice as much Northern Nigeria cotton as we do use. Instead, we have the ridiculous situation in which the Liverpool Cotton Exchange has no contract whatsoever for Nigerian cotton. We should be supporting the Nigerians as much as possible. But the policy of the Government in destroying the commodity markets as we knew them under the Labour régime is making it very difficult indeed for Nigeria to carry out their economic policy.
I hope that the Economic Secretary to the Treasury will not fall into the trap into which so many young men like himself fall. The hon. Gentleman is highly skilled and very gifted. He delivers many highly intelligent speeches to the House of Commons, but let him beware of being too clever at the Dispatch Box, because it can make a bad impression on people in the country.
The President of the Board of Trade said something last Wednesday which really hurt me. The right hon. Gentleman is a young man who has never been exposed to the possibility of being sacked

from a workshop and turned out into the streets to find a job. The right hon. Gentleman said:
To sum up, there is no case whatsoever for dropping or mitigating the measures which we have introduced. It is our belief that they are beginning to work, and we intend that they should do so. If men are to change from one job to another there must at some stage be some redundancy somewhere, and we should not be shocked at our own success in this aspect of economic policy."—[OFFICIAL REPORT. 18th April, 1956; Vol. 551, c. 1043.]
In following the dictates of the Cabinet, it is easy for a young Minister at the Dispatch Box to overdo it and upset a great many people who earn their living in the factories and workshops.
I ask the Economic Secretary and the President of the Board of Trade to think in terms of what it means to be made redundant. Those who have never been made redundant and never been turned out without someone giving the reason for it, have never experienced one of the most degrading things that can happen to a human being, but that is exactly what the Government are doing to the country as a whole. They are not telling the country why they are doing what they are doing. I am certain that the country will have something to say about it before many months have passed.

6.27 p.m.

Mr. F. M. Bennett: I hope that the Committee will forgive me if I do not follow the remarks of the hon. Member for Ashton-under-Lyne (Mr. Rhodes) except to make one general comment on his undoubtedly sincere summing up. It is that because, rightly or wrongly, we on this side of the Committee believe that the policies which we follow will prevent unemployment—serious unemployment—in the country that we are adopting them. Just as the hon. Member was sincere, so we on this side of the Committee are equally sincere in our belief that our disinflationary policies are intended to produce that end. Time will show who is right, but I am prepared already to form some conclusion as to what the answer will be.
After having listened to the whole of the debate since the Budget was introduced, I have been surprised that a most important aspect of the Chancellor's proposals has received so little notice, namely, the proposed changes in the financing of the nationalised industries.


Today, only two fleeting remarks have been made on the subject, by the right hon. Member for Battersea, North (Mr. Jay) and one of his hon. Friends.
I have far too much respect for the intelligence of the right hon. Member for Battersea, North to imagine that he does not know the answer to his query about the alleged paradox of the Chancellor's on the one hand "driving" the municipal authorities into borrowing on the markets and "driving" the nationalised industries into Exchequer control. The right hon. Gentleman knows that, while the municipal authorities can pledge their own credit, the nationalised industries are not able to do so, due to the statutes under which they were created and the nature of their assets and the way they are controlled. I am sure that the right hon. Member is only too well aware of that fact.
I myself am particularly pleased that the Chancellor should have taken the step he did over changes in the financing of the nationalised industries. I regard it as another step in the battle which my hon. Friends and myself have fought for a long time against the excessive use of the Treasury bill for long-term financing. Indeed, for a considerable time we have fought on the general line that we should not borrow short to lend long. That is a classic maxim which can scarcely be too widely accepted.
I do not wish to rub salt into a wound, so far as my hon. Friend the Economic Secretary is concerned, but in a recent Adjournment debate late at night, when I made this general point and asked for action on the lines now taken, my hon. Friend said this:
I think that the hon. Member for Torquay would agree that it makes no difference whether the borrowing is by issue of stock, by issue of bills, by issue of tax reserve certificates or by issue of Savings certificates."—[OFFICIAL REPORT, 8th March, 1956; Vol. 549, c. 2499.]
Whatever may have been the views of the Economic Secretary on that night, I ask the Committee to accept that what I have just read could hardly be in greater contrast with the remarks of the Chancellor in his Budget speech. When my right hon. Friend said then that official support—that is, support by the Exchequer for financing—

can, in fact, only be given, by and large, by borrowing the necessary funds on Treasury Bills. This, of course, impedes the whole operation of our monetary control. It kicks the ball, as one might say, through one's own goal."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 864.]
If there is no difference in these two statements as to how we do that, it is a form of football in which I have not yet engaged.
In fact, the object of this exercise is to return to what I do not think would be seriously disputed in any part of the Committee, to borrowing in a suitable manner for long-term projects. In the last few days we have had an example of one more step in that direction by the announcement of the new issue of Treasury stock.
Before leaving this portion of my remarks I would add that had funding operations of this kind taken place in the more lush times of two or three years ago, we would not have had to issue the 3½ per cent. stock at 81, but we would have been able to issue it at par, with a consequent considerable saving to the Exchequer. However, that is a chapter which I am glad to say appears now to be closed, and I do not intend to pursue it further this evening.
Instead, I want to mention now another feature of these debates which I have noticed during my constant attendance. I am referring to statements from a variety of hon. Gentlemen opposite about tax avoidance and tax evasion. Allegations of widespread tax avoidance and tax evasion render a great disservice to the credit of this country, and they are not borne out by the facts.

Mr. Rhodes: Is the hon. Gentleman aware that what he is saying is nonsense? Not two years ago the Chancellor introduced a Clause into the Finance Bill preventing companies from getting away with the whole of the previous year's Income Tax, which I calculated to amount, in the course of year, to £10 million.

Mr. Bennett: I am quite happy to respond to that interruption, although the hon. Gentleman had a fairly good run for his money. Although he may not have been, as he accused the Economic Secretary of being, too clever, the hon. Gentleman proved only too well that he was articulate, but from now on I hope


that he will allow me to make my speech in my own way. Even if the hon. Gentleman is correct in what he has said, tax evasion or tax avoidance of £10 million when we are talking in terms of a Budget of £5,000 million, is not widespread, and it is not a good idea to put up such suggestions to the country—

Mr. Rhodes: Quite wrong.

Mr. Bennett: I will give examples of what I have just said. Only yesterday, in the Sunday Pictorial, I saw an allegation made by the hon. Gentleman the Member for Islington, North (Mr. Fienburgh). I am sorry that I have not been able to notify the hon. Gentleman in advance, but I do not suppose he will mind my quoting what he stated in print, namely, that £300 million of Surtax is being avoided by tax dodgers which should otherwise be paid.
That is a good example of grossly exaggerated figures. The mere thought that £300 million of Surtax is being avoided by tax dodging is patently ridiculous in view of the fact that the total amount collected is only £138 million. I should not have thought that anyone would believe that tax payment is being avoided amounting to more than twice the total amount collected.

Mr. Jay: If the hon. Gentleman is attacking my hon. Friend—

Mr. Bennett: I am not.

Mr. Jay: —or criticising him, does he not think it extraordinary that, while the national money income has risen two or three-fold since the war, Surtax revenue has barely doubled?

Mr. Bennett: There is a counter-argument to that which has been made on more than one occasion in this Chamber. It is that, in the meantime, some of the biggest payers of Surtax have had their estates depleted each year by successive Budgets of Chancellors of both parties through death duties. There is nothing more natural than that the Surtax should continue to fall. We should expect it to fall even more as years go by as many more of our large estates are further split up by deaths. So there is nothing odd about that fact.
Hon. Members on both sides of the Committee have been fair enough, and

ready, to admit that there is a distinct difference between tax avoidance and tax evasion. The Treasury, rightly, has a different outlook on both those terms. We want to be fair about tax avoidance. I do not suppose that there is a single hon. Member of this Committee who, when filling up his Income Tax return, does not take good care to claim Income Tax reliefs to which he is entitled. That is not regarded as discreditable. It is, however, an example of where maximum opportunity is taken by everyone in this highly taxed State not to pay tax which he need not pay. That is called tax avoidance.
I say in all seriousness to the Committee, however, that no one deplores tax dodging through tax evasion more than myself. I say that as a taxpayer, because the more dodging takes place, the more I have to pay to make good the ensuing deficit. Nevertheless, it is wrong, as the right hon. Gentlemen the Member for Huyton (Mr. H. Wilson) suggested, that because tax dodging was going on we ought to put up taxes. At any rate, that was the implication of what the right hon. Gentleman said, and it is a classic muddling of cause and effect. It is precisely because taxes are so high in this country that there is so much resort to tax avoidance and tax evasion.
All over the world one finds that most energy is devoted to avoiding paying taxes where they constitute the maximum burden. This is not an altogether unnatural reaction by the human animal. As I have said, tax avoidance in this country is not nearly as widespread or as great as is sometimes imagined. Although we have, rightly, to continue to close loopholes by which people wrongly escape paying tax, we should not forget that the basic cause of it is that the taxation constitutes a terrific burden. Ordinary men and women do not sit down to work out ways of paying less tax unless taxation is a burden to them.
One or two hon. Members, including my hon. Friend the Member for Taunton (Mr. du Cann), in an excellent maiden speech, have had the courage to speak on behalf of Surtax payers. On any basis of analysing voting, those who speak on behalf of the Surtax payers cannot be accused of adopting an electoral dodge, because the Surtax payers represent very few votes. Nevertheless, justice demands


that we should say something about them when we think they are suffering an undue burden.
I support the plea that some relief should be provided at least at the lower end of the Surtax scales, either by raising the floor at which Surtax is paid from £2,000 to £3,000 or £4,000 or by lessening the rates in the lower levels, or by a combination of both. This should be done at the earliest possible opportunity. I am not thinking simply of bringing relief and extra comforts to one section of the community. Ours has to be a keenly competitive country. I go once or twice a year to the United States and Canada, and they know the immense value, both at present and in the future, of encouraging young men who will be the executives of tomorrow.
We run a grave risk in this country if we give the impression that it is impossible for one to rise against the burden of taxation and expect a fair reward for one's merits. If that is the case, we shall find an increasing number of our young men going elsewhere, and we shall be the losers. When one sees some of the offers coming from Canada to managers and potential managers in this country, one is almost frightened at the possibilities if the trend continues indefinitely.
There is another side to taxation which is too heavy. Criticisms have been made about the small amount of money that Britain puts back into investment. In this respect, high taxation plays a part which it would be folly to ignore. I cannot pretend to have made an exhaustive study of rates of taxation in countries where rates of investment are high, but I have a very shrewd suspicion, and would be prepared to make a bet—for the moment I am ignoring the Soviet Union, because the investment there is not private enterprise—that it is in the countries where there is maximum tax relief that money is being put into investment. It is there that we find a rise in the investment rate. If it were otherwise, it would be unnatural.
Although, therefore, it may not be electorally popular at the moment, I hope that the Chancellor will think seriously about Surtax in respect of earned income—I am not at the moment making any plea in respect of investment income—

between, at any rate, £2,000 and £3,000 or £4,000 a year and will see whether, next year, he can give some relief. I will make him an offer, and in this I hope that hon. Members opposite will not think I am saying that I am in favour of a capital gains tax. If the Chancellor will make it possible for men earning between £2,000 and £4,000 a year to obtain greater relief from tax, I shall not mind if his Department becomes more strict about what is known as "trading" in securities or property on the part of people who are not out to make a genuine capital appreciation on their investments. I would emphasise that this must be part of a package deal.
As I have said, I cannot blame anybody these days who tries by all the means within his power lawfully to better himself and his country no matter what position in the economic scale he occupies. If the Chancellor will give fair relief for Surtax payers, by all means let him have a go at those who are trying to earn income, what is really income, by methods which are not nearly as creditable as working hard and getting one's due reward.
I now want to say a word about the Premium Bond. I have considerable respect for anyone who does not like gambling in any form and anyone who thinks the Chancellor's idea represents gambling and does not want to buy the bonds. At the same time, I have a wholehearted contempt for some of the hypocrisy that we have heard—in saying that, I do not mean to be offensive; indeed, the hon. Members whom I have in mind do not appear to be present—about the evils of the bond.
I gather that the right hon. Member for Huyton had a fairly rough time on this subject on television the other night, in the course of which it emerged that he did not mind local Socialist parties raising money by raffles but objected to the bonds. It is a new and strange ethical theory that, apparently, it is all right for a party which aspires to become the Government to try to raise funds by gambling for that purpose, of helping it to become a Government but when it achieves power it suddenly dons a white sheet.
For a long time Governments of all political complexions have only been too glad to receive revenue from gambling sources such as football pools, horse


racing and dog racing. We have not previously heard of moral objections to tainted money springing from those sources. We now have another new ethic in the minds of some hon. Members opposite, which is that sin is all right as long as it is secondhand.
I thought, too, that my hon. Friend the Member for Louth (Mr. Osborne) was a little unfair in attacking the bonds, apparently not on moral grounds but because he thought they were rather "poor stuff" and reminded him of what had taken place in France and Italy and the way in which the currencies of those countries had depreciated. However, I would point out that one of the hardest and most dependable currencies in the world is the Swiss, although Switzerland has had bonds of this kind for some considerable time.
Reference has been made today to the possibility of a small rate of interest being paid on the bonds. I have thought about this a good deal, because that was my initial reaction. Yet I foresee considerable administrative difficulties in following that suggestion to its logical consequence. I would suggest, instead, a modification of the proposal, that after having held a bond for, say, five, seven, or ten years, one might draw it out with a small specific premium added. That would overcome the administrative difficulties in having a rate of interest. This would mean that the Premium Bonds would follow the Swiss example even more, for this is what has been done without difficulty in Switzerland.
There is another advantage to that as opposed to paying interest. I cannot see why, if this is a straight bond issue with a premium on encashment after a given number of years, we need go to all the expense and trouble of registration when we draw them. I cannot see any objection to these being bearer bonds provided that we have not to go through the trouble of paying interim interest. I am making these proposals not necessarily because I believe that the Government will adopt them now, but also in the hope that, in the unlikely event in the future of the party opposite coming into power and keeping these bonds going, as I feel sure they will, these suggestions may be useful in improving the issue.
I would like to mention my own special idea as an inducement for saving, which I was hoping the Chancellor

might incorporate in his savings proposals. At the moment, any one of us in this Committee who invests money in life insurance, subject to certain conditions and regulations, gets a certain proportion which can be set against tax—the purchase price of the insurance security. I do not see why this principle should not be continued in regard to savings. Why should we not have, if not this year then in another year, another sort of savings bond—leaving interest on one side for the moment—part of the purchase price of which could be set against tax? I cannot see any reason why certain qualified long-term bonds, with a ceiling to see that they were not resorted to unfairly, should not be used as Government bonds to promote saving, and a portion of the purchase price set directly against tax, instead of handing all this business over to life insurance companies.
Having run through, as rapidly as I could, the various points which have attracted my attention in the course of the debate, I say, in conclusion, that this does not alter the fact that, generally, I think this is a remarkably fine Budget, taking into account the circumstances of the nation at present and the narrow field of manoeuvre in which the Chancellor had to work. I frankly believe that it will go a long way towards solving problems which hon. Members on both sides of the Committee want to see solved, whichever party is in power.

6.54 p.m.

Mr. A. E. Hunter: I welcome the opportunity of saying a few words in the Budget debate. I will not detain the Committee for long, because I know that many other hon. Members on both sides would like to take part in the debate. What I have to say tonight is intended to deal mainly with one point. Before I come to that, however, I should like to mention three other points which have been raised by the Budget.
The dearer bread policy I strongly oppose and, also, dearer tobacco. They will hit the lower paid section of the community, old-age pensioners and people with fixed incomes. The only bright spot in the Budget, in my opinion, is the tax free limit of £15 in Post Office and trustee savings deposits.
The main point with which I wish to deal has been the subject of Questions


by hon. Members on both sides of the Committee to the Chancellor during the past six months. What does the Chancellor intend to do about post-war credits? The post-war credit holders seem to be the forgotten men of this country. Every time that I—and even hon. Members opposite—have put Questions on post-war credits, we have been told by one of the Chancellor's lieutenants—the Economic Secretary or the Financial Secretary—"We must not anticipate the Budget statement."
The Chancellor made a Budget speech lasting 110 minutes and he set forth, with a great flourish of trumpets, his lottery bonds, which have been praised by hon. Members opposite; but he did not say one word about post-war credits—a debt which this nation should make some attempt to honour. Obviously, in 1945 and the two years following, the Government of that day could not pay out postwar credits. There were not enough goods in the stores or in the shops. But the Labour Government did make some attempt, which this Government have not improved upon, to pay post-war credits at the age of 65.
I remember that in 1950—I am sorry that he is not present tonight—when the Postmaster-General was standing for election at Luton, he made a radio broadcast or, behalf of the Conservative Party in which he said, "Why do not the Labour Government pay out post-war credits"? The Postmaster-General has been a member of the present Government for five years. Why has he not attempted to get the Government to pay out post-war credits? I hope that tonight the Chancellor will make a statement about this matter. The policy of the Labour Party at the General Election was to lower the age limit each year, so that eventually this money would be paid. Why cannot the Chancellor lower the age from 65 to 62 this year, to 60 next year and to 58 the year after until this debt has been paid?
This money was compulsorily deducted from people's wages and salaries between 1941 to the end of 1944. A few months ago, I put Questions to the Chancellor. I believe that the Financial Secretary replied. I asked what was the present-day value of £100 post-war credits allocated in 1942 to 1943. I was told that it was roughly £63, which means that owing to

the hold up of post-war credit valued at £100 in 1942 to 1943 there has been a loss of nearly £40 in purchasing power today, and no interest has been paid on these credits.
I have a case in my constituency of a man of 57 who is seriously ill and who will never work again. He has £90 in post-war credits. In present circumstances, this man has to wait at least eight years. Surely the Chancellor could make a start by beginning to lower progressively the age from 65. All classes of the community own these post-war credits, the middle-class of whom the Conservative Party talk so glibly of wanting to help, the working-class—clerks, shop assistants, engineers, railwaymen, miners and others—all of whom had compulsory deductions from their wages during the war years.
This is the time of the year when we expect a statement from the Chancellor. If he is not to make a statement, then I ask the Financial Secretary to ask his right hon. Friend to say what the Government's intentions are about postwar credits and whether the Government intend to honour the pledge about them. I know that this is a difficult problem. All big debts are unpleasant and people often try to avoid them, or to put them off as far as possible. I hope that the Government will be honest and will make an announcement about them tonight, because I can assure them that throughout the country there is deep feeling about the way in which they have handled the post-war credit business. After all, the war has now been over for eleven years.

7.0 p.m.

Mr. Julian Ridsdale: I hope that the hon. Member for Feltham (Mr. Hunter) will not expect me to follow him in speaking about post-war credits, although I must say that I have every sympathy with the holders of postwar credits.
I welcome the Budget, because I consider that it is a first-class insurance Budget, not only an insurance Budget for the future of the country but one which gives individuals a chance of insuring for their own future. The country has not yet realised what a great step the Chancellor has taken and what a great incentive he has given to people to save for their own future.
Clearly, at a time when our overseas situation is precarious and when we are suffering from over-full employment, it would have been wrong to have budgeted for any form of deficit. I welcome the fact that the Chancellor has not done so, but has planned a balanced Budget and that he has done that not by increasing taxation, but by cutting Government expenditure. We are encouraged by the fact that the Government have promised a further £100 million cut in their expenditure. When I listened to the right hon. Member for Battersea, North (Mr. Jay) this afternoon, a shudder went down my spine when I considered his talk about a surplus and the Government doing the saving. I thought we were to have the same old medicine that we have had in the past. We can only deduce that the policy of the Opposition is to increase taxation. What a difference that is from our outlook on this side of the Committee!

Mr. Jay: Did the hon. Member shudder at what the Economic Secretary said, which was exactly the same as I said?

Mr. Ridsdale: I would not agree that the Economic Secretary said anything similar to what was said by the right hon. Gentleman.

Mr. Jay: I quoted what the Economic Secretary said and said that that was wholly what I thought.

Mr. Ridsdale: The right hon. Gentleman may be twisting words; I contend that the fundamental difference between our outlook and that of the Opposition is that we believe that the country will respond to the incentives for saving and the Opposition do not. I have no doubt that if that succeeds, then it will be possible to reduce taxation. None needs that reduction more than the middle income groups and the retired.
I remember the advice given to me in 1951 by the late Sir Richard Hopkins, who was a great financial expert in the Treasury. He said, even then, "I hope that the Treasury and the Government will do all they can to further the use of differentials, especially in industry." I hope that the Government will pay attention to the plea for increasing the Surtax level. I hope that in this expansionist opportunity which the country is being given individuals will feel not held down,

but will rather look forward to the future with the hope that every man can feel that he has a millionaire's baton in his pocket.
We have all been hit by rising costs, and especially by the rising cost of coal. I welcome the new financing of the nationalised industries and I trust that we shall be able to ask Questions about it. In the past, we have had a barrier around these industries, because Members have not been able to answer detailed Questions about them and at times we have had a veritable smoke screen put up by the Opposition in defending what to some hon. Gentlemen opposite seems to be their pet baby.
When I heard the hon. Member for Leek (Mr. Harold Davies) speaking on Thursday, and then heard him supported by the deputy leader of the Opposition in saying that even if we had a million extra people in the mines we could not use them, because there were not enough places at the pit face for them. I remembered that a week previously I had heard the Chairman of the National Coal Board say that we could do with 15,000 men now to produce 4 million more tons of coal a year.
The hon. Member for Ince (Mr. T. Brown) also defended the nationalised coal industry. When the right hon. Member for Huyton (Mr. H. Wilson) complained of dollar imports last year, he did not mention the fact that a large part of the bill was for coal imports. Indeed, I must correct an intervention which I made on Wednesday in the speech of the hon. Member for Ince. I said that since 1951 we had invested £200 million in the coal industry, that wages had gone up 29 per cent. and that production—and this is the error—had increased by ½ per cent. I should have said that production had decreased by ½ per cent.

Mr. William Blyton: Is the hon. Member not aware that since nationalisation coal output has gone up by 12 per cent.?

Mr. Ridsdale: I am talking about coal output since 1951 and the amount of capital invested since my party came to power and the amount of incentives we have given in the form of wage increases. Surely no one will deny that a large contributory factor to our present difficulties is the coal situation and yet we hear


very few constructive suggestions from the other side of the Committee about how to deal with that problem.
Many of us are beginning to have serious doubts whether nationalisation of the basic industries has many merits left, especially when we see what Mr. Randall said in his resignation letter to The Times only recently. I hope that the Government's re-financing operations will be the first of many proposals for a more progressive approach to the nationalised industries, because present coal prices affect us all, and none more than the retired, the small man and the small business.
I should like to refer to small businesses. I know that for a long time we have been moving towards a new state in industry, to the larger unit, and to larger associations of employers and employees, yet in this transition we have been losing a lot in humanity. John Brown's body may still be employed in big business, but his soul has been left behind in the small business and we must be careful that we do not entirely obliterate it by taxation policy. I hope that when the time comes for tax remissions—and it will come, for the savings incentives of the Chancellor will succeed—wise statesmanship will be used to see that the small man, the small industry, the small farmer and horticulturist are not completely obliterated from our society.
There is another point which I wish to make. It concerns retired people who own their own houses or small bungalows. I want to refer to the amount that these retired people have to pay in rates for education. It falls on small bungalow owners and small householders. Many of them are retired and find themselves having to pay rates for the education of those people who are in industry. Yet in many cases those in industry will be able to buy Premium Bonds, while the retired people are having more and more to call on their savings. Let us take this charge off the rates and make it a charge on the Exchequer. I hope that the Chancellor will consider that alteration, because it would be a great help to the retired income groups. I hope that the Chancellor will get together with the Minister of Housing and Local Government to see whether something

cannot be done for that hard-pressed section of the community, in the coming review of local government finance.
Finally, may I say that I agree with the right hon. Member for Huyton in doubting whether we can stay the head of the sterling area for very long with excessively high rates of interest. I hope that after such a Budget it will not be necessary for too long to have these high interest rates. Clearly, if we are to be able to reduce them, we have to have a proper balance between defence and fixed investment. How can we alter that situation in view of the amount we are spending on defence?
The right hon. Member for Huyton gave us some gloomy figures for fixed investment in 1954. He was quoting from the European Economic Survey, but he did not read over the page, where he would have found that we are spending 8 per cent. of our gross national product on defence, whereas Germany, with whom he compared us, is spending only 4 per cent. and Belgium, with whom he also compared us, is spending only a very much smaller proportion. If we are to have our fixed investment, we must have a better balance with defence.
I have heard the Opposition's attack on the Budget for several days and I must say that I consider it to be extremely weak. I trust that we have now got over the worst of this wage inflation. We do not hear very much about wage inflation from the other side of the Committee, although earnings per hour in industry last year have gone up by 8 per cent. while output has increased by only 3 per cent. I trust that we will now see, as we have done after the Budget, renewed confidence in the £ and a building up of our reserves, and that, sooner rather than later, we shall move towards convertibility.
It is only by so doing that we can continue to be the financial centre of the world. I am convinced that in the long run it is only by moving more and more towards a freer economy and extending trade, as we have been doing under the present Government and under the previous Chancellor—whose work we should not underestimate—that we can support the 50 million people who live in these islands. We are moving towards a free economy and I am convinced that the Chancellor has given us incentives to take


the opportunity to take a further step forward away from Socialism and towards that free economy in which so many people in this country, the Commonwealth and Empire believe.

7.17 p.m.

Dr. Horace King: It is only with some difficulty that I resist the temptation to follow every point made by the hon. Member for Harwich (Mr. Ridsdale). If I were to do so, I should delay the Committee and prevent other hon. Members from speaking. I will only say that I hope that the clarion call which he has made for young miners to man the mining industry will be heard by the Conservative Party which he represents. Unfortunately, until now I estimate that about 90 per cent. of the coal produced in this country is produced by people who vote Labour and that of the other 10 per cent. nearly 5 per cent. are Communists. If the middle and upper classes will send their boys into the coal mines—and some day we shall have a state of society where that is not regarded as degrading—the success of the British coal industry, which the hon. Member, like myself, so passionately desires, will be brought much nearer to fruition.
I want to deal, first, with one or two points of detail and to express the hope that before the Finance Bill leaves the House we shall have remitted entertainment tax on football clubs or at least on the smaller football clubs. Similarly, I hope that we shall use every opportunity of pressing for a remission of entertainment tax on the live theatre, in what I regard as a desperate attempt to preserve something precious and worth saving in British culture.
I admit that the Entertainments Duty is not the only factor which has made minor clubs like Southampton struggle desperately in recent years to keep their heads above water. Entertainment tax is not the only factor which has throttled the live theatre. But if a theatre makes £6,000 profit and has to pay £7,000 in entertainment tax, that theatre is doomed, and the dooming of the theatre is folly on the part of the Government. We should tax the actual profit made, not the entertainment. I hope that hon. Members on both sides of the Committee will press the Chancellor on these matters before we end the Budget debate.
I would also support what was said by my hon. Friend the Member for Brierley Hill (Mr. Simmons) about B.L.E.S.M.A. So far, the non-party group which has constantly advocated the claims of disabled ex-Service men in this House has managed to keep the issue of ex-Service men on a non-party basis. I hope that it will always remain so. But I think I am right in saying that over 200 hon. Members representing parties on both sides of the House are solid in their determination to do all they can to press the Government to grant what they think is the just and generous claim of B.L.E.S.M.A. for some extra allowance to be given to the limbless ex-Service men to compensate for the increasing disability which accompanies increasing age.
During the past months I have wondered why the party opposite chose to get rid of the former Chancellor of the Exchequer, whom I have always regarded as a Triton among the minnows on the Government Front Bench. The right hon. Gentleman who is now the Lord Privy Seal was the architect of the Tory Party's Election victory. The April Budget of last year won the Tories the last General Election just as surely as the two subsequent and more realistic Budgets are losing them support in the country. But if the April Budget did good to the Tory Party, harm was done to Britain. All the grave issues that we are now discussing so seriously were brushed aside in that Budget. We were told that Britain was prosperous under the Tories, so much so that there were tax concessions to the better-off people amounting to £150 million which added to that spending power of the community which we are now desperately trying to curb.
The greatest disservices the Conservative Party has done to Britain during the past few years are two. First, both in opposition and in power it minimised the grave struggle made in post-war years by Britain to build up a viable economy. At least, the Tories minimised it until they had been placed securely in the saddle of Government by a large majority. Secondly—and I was amazed to have striking anticipation of what I was going to say in much of the speech of the Economic Secretary this afternoon—my charge against the Conservative Party is that they destroyed, or tended to


destroy, the idealism fostered by the war and preserved in post-war Britain by the first Socialist Government by measures absolutely different from the cynicism, frustration and extremes of luxury and poverty which followed the First World War.
The philosophy of the Tory Party has, throughout these last years, been purely materialistic, The Tories have said that all our economic problems can be solved if we leave things in the hands of the money-makers and the profit-takers, and, as one of them said in the first Tory Party Budget that I ever heard in the House, many of them believe that money can buy everything, even money.
Even in the process of reversing the engines and of making sure that the differentials between the richest and the poorest people in this country were widened by each Budget and by each major act of the Government, one felt that the former Chancellor of the Exchequer still hung on to what he had learned from his work on the Education Act, 1944, that he still cherished in his heart the Welfare State and the new Toryism which he had done so much to build up in the years when the Tory Party was in the wilderness.
One felt that, when the right hon. Gentleman cut the school building programme late in 1950 or in 1951, he did so rather regretfully, and that, when he restored the cuts that had been made and put back the school building programme to normal, he was happier and tried to forget that, by putting a spanner into the building programme, he hampered the whole developing phasing of school building. But his successor has thrown a similar spanner into the educational works since he took office. It will have similar results.
Why discard the former Chancellor? Most of his work, his philosophy and his policy still permeate the Budget. High interest rates still continue, the concessions that he gave to the richer taxpayers in four Budgets still survive. The new Chancellor has not extended these concessions to the rich, despite the pathetic pleas from Surtax payers—and one such plea we have heard in this debate—and from men who buy their children out of the State schools, not merely to secure for them a better education, but also in the

certainty of an unfair and privileged entry into the most distinguished and profitable positions in the country.
The burdens on the poor still survive in this Budget, with new additions from the latest cut in the bread subsidy. There is no radical change in this Budget to match all the lavish build-up which the new Chancellor received in the past few months. It is not a case of Rehoboam after Solomon; it is a case of Rehoboam the Second.
I really think that this is a mean Budget. There was certainly no new warmth or human feeling in the new Chancellor's approach on Budget day. For example, the British Legion is demanding at the present time a rise in pensions to match up to or overtake the rise in the cost of living, and there is not a reference to that by the Chancellor. The old-age pensioners claim that they alone are enjoying none of the increased benefit of British production and improved productivity enjoyed by other people, and ask him for further adjustments to the National Assistance Board scales and basic pensions. Not a word in the Budget for the old-age pensioners, except the singularly mean extra charge on tobacco and bread.
The low-paid worker, or the old man or old woman on a fixed income—a tiny pension, nibbled away in value by a series of Acts and a series of Budgets of the former Chancellor—gets nothing from this Budget but dearer bread and dearer tobacco, to supplement his diet of dearer potatoes, inflicted on the British people by private enterprise in uncontrolled action at the present time. No wonder that the hon. Lady the Member for Tyne-mouth (Dame Irene Ward), who fights night and day for those living on fixed incomes, is angry with her own Government and feels that they have let her down.
If we judged Britain by what the Chancellor said in his speech, there might—apart from those with large families, and I always try to be fair—be no hardship existing in this country. Britain, we are told, is spending too much. I believe that to be true, but not all Britain is spending too much. Not even every capitalist, not even every rich man, is behaving like Sir Bernard Docker, who gives us a lecture on the necessity of saving from the new State of Hollywood-Monaco.
Certainly, the bottom 5 million British people looked to this Budget for some sign of a real war on rising prices, and some relief from that part of the increased cost of living which is caused by indirect taxation and by cuts in the basic food subsidies, and for some sign that the Welfare State, on Budget day would do what we believe it is the duty of the Welfare State to do—have a look at the condition of its poorer citizens. These 5 million are making no contribution to inflation by their wasteful spending. Most of them are struggling to keep going week by week, and no attractive, new, cheap-jack scheme will induce them to save, because they have not got the money to save.
Where, then, lies the change which has caused the demotion of one of the Government's strongest and most able men? I believe that it lies in one of the most significant remarks I have ever heard in this House, which was made by the former Chancellor two Budgets ago. It was when he turned round on his own benches and declared that substantial cuts in Government expenditure could not be made without a fundamental change in policy. I believe that the sinister change lies in the promise of the new Chancellor to slash public expenditure by £100 million. Let us note that there is to be no cut in interest rates in the tribute paid to money-power by the taxpayer; rather are they to increase. The Government are piling interest burden on top of interest burden. As the Chancellor himself said, 3s. in the £ in Income Tax goes to meet interest on the National Debt alone, and all that interest ultimately has to be met by the labours by hand and brain of all those who work in this country. I believe that if this process of piling up debts on the shoulders of the British people continues year after year, it can only bring about catastrophe.
Over the weekend, I had hoped—though I have been disappointed in reference made to it in the speech by the representative of the Government this afternoon—that the Government had become aware of the serious indignation felt by the Nonconformists over the proposal to introduce the Premium Bond. From my conversation with representatives of the Churches, I can tell the right hon. Gentleman that many of them resent, equally with the intrusion of

gambling into the Savings movement, the cheapjack suggestion of the Chancellor that it was not a gamble, because one would not lose one's bond. Everybody in the country, including the Chancellor of the Exchequer, knows that in the Premium Bond the stake with which the gambler is playing is the interest on his bond.
The utmost that I think can be said—and I want to be fair—for the Premium Bond proposal is it might tempt some youngsters into the habit of saving. Probably, it will tempt some of the older people as well, and it may lure some youngsters and older folk from the more wasteful throwing away of bond and interest which football pools, horse racing and all the rest involve. I speak for all the Nonconformists in this Committee and for many other people, Christian and non-Christian, when I ask the Chancellor to look again at the matter before he decides to embark upon the principle of the Premium Bond.
If he decides to keep the Premium Bonds, I plead with him to keep the system outside the school savings system. Whatever one's "broad" or "narrow" views may be about gambling for adults, the last thing we want is to encourage children to indulge in gambling. I wish that the Tory Christians who condemn Premium Bonds would have a real think about the mass of gambling that builds up the money system today, and that Nonconformist stockbrokers should ask themselves whether it is logical to cavil at Premium Bonds—straining at the gnat—while they swallow the camel of the gambling that goes on upon the Stock Exchange.
In the days long ago, when the House of Commons was Christian, and for the first fifteen centuries of the Christian faith, Christians everywhere regarded interest-taking as the sin of usury. Christians might conceivably look again at their early beliefs in view of the exceedingly heavy burden of interest which is placed upon us. After the war it seemed as though we had got this particular capitalist evil under control, by means of the cheap money policy of Sir Stafford Cripps and of my right hon. Friend the Member for Bishop Auckland (Mr. Dalton). Both of them gained much public obloquy from the Tory Party because of their cheap money policy.
But now the power of money is the god before which the Government worship and to which they are steadily handing over all economic power. This is shown in the colossal burden of interest on the National Debt, on loans to local authorities, and on all who pay rents, rates and taxes. It threatens to swamp local government, even if it does carry out what I believe is one of the main purposes of the exercise, to redistribute the wealth of the country as between the rentier and the worker, to the advantage of the rentier. In this Budget there has been no cut in the burden of interest and no attack on the burden of the National Debt. We have simply had comfortable passages from that glibbest of historians, Macaulay.
There has not been a word about reducing National Service. I am glad that the noble Lord, the Member for Berwick-upon-Tweed (Viscount Lamb-ton), speaking earlier in the debate, referred to the vital contribution that agreement on disarmament and a reduction in the period of National Service would make to our economy. A very healthy reduction it would be. Disarmament received very scanty reference in the speech of the Chancellor of the Exchequer, who, nevertheless, insisted with determination upon reducing other Government expenditure by £100 million.
Where is that £100 million to come from? From the £230 million subsidy to agriculture? If so, the Government would have been much more honest if they had told the Tory farmers so before the General Election. Is it to come from education? The cuts in the school building programme have already begun before the Budget. Figures which I received from the Minister of Education showed that on 1st April, 1956, 231 school projects proposed by local authorities had been disapproved by the Minister, although we need more and not fewer schools. The whole future of the new, revolutionary secondary education for all our children which has been the miracle of the last ten years is at stake. The Chancellor admitted that we are committed to a rise in teachers' salaries this year, and that we are embarking on a great extension in technical education.
In none of these things is there justification for a cut in Government expenditure, but every justification for expansion.

I believe that the Chancellor will be compelled, by sheer force of circumstances, and even by the policies adumbrated by the Government themselves, to carry that extension out. The cut obviously cannot be made in pensions. Nobody in the country would be mean enough to cut old-age pensions.

Mr. E. Fernyhough: Does not my hon. Friend think that a Government who raise the price of bread and milk are not thereby reducing old-age pensions?

Dr. King: My hon. Friend has anticipated what I was going to say. I have already said that no Government would be mean enough to cut the scale of old-age pensions, but, by permitting new burdens on the cost of living, the Government are carrying out what is morally a cut in the old-age pensions.
Is there to be a cut in the National Health Service? Let hon. Members read the Guillebaud Report, which demands more and not less expenditure for the National Health Service. This, too, is the moment when nurses have just secured a major advance in salaries. A cut in the National Health Service could only be carried out by a major operation.
The truth is that all ways of economy to realise the £100 million saving of which the Chancellor dreams, and for which his back benchers have clamoured for the last four years, are closed, except one. The saving cannot be accomplished by salary reductions or by mere administrative tidying up. I hope that all hon. Member's will concede that we have the most efficient local and national Civil Service in the world.
The saving can be achieved only by sacrificing a year's education, postponing the move towards three years' training for teachers, charging for hospital treatment or for ambulances, angering the Tory farmers, by refusing to match pensions to the rise in the cost of living, or by some similar cut in the social services. I believe that is why the Government have removed from the office of the Chancellor of the Exchequer the man who would have opposed any of those cuts. I realise that I am quite as likely to be wrong about the Tory internal party struggle as the Tory Party is about our internal party difficulties.
Whether this is so or not, I warn the Government not to tamper with the Welfare State any further. British parents passionately desire equal opportunity for their children of all social classes. British people have become devotedly attached to the National Health Service, and most of them, Tories as well as Socialists, have become proud of what this Welfare State is doing for our old folk, crippled folk, sick folk and unemployed folk, and for the children. If the £100 million is taken, as the Geddes and May cuts—to which the Chancellor ominously referred in his Budget speech—were taken, out of the social welfare, the Government will not last even the normal run of a Government. I believe the Government have already lost the next General Election, and that even the skill of the Lord Privy Seal in drafting the new programme cannot prevent that defeat.
If the Government start a £100 million slashing cut on the Welfare State which we have built in this country since the war, they will be digging their grave much sooner than 1959.

7.40 p.m.

Mr. R. Gresham Cooke: I was surprised to hear, in that part of his speech which was purely party polemics, that the hon. Member for Southampton, Itchen (Dr. King) said the Conservative Party did not support the coal mining industry. I used to live in a coal mining area, and my experience was that at least the whole of the management and a greater part of the administrative staff voted Conservative. Indeed, a large number of miners also did so. If not, how is it that the Conservative Party collects some thousands of votes in each of the mining constituencies?
I was also rather surprised that the hon. Member should read so many changes of policy in the change of one Chancellor of the Exchequer for another. Surely a man who becomes Chancellor does not have to carry the burden the whole of his life. The Government are entitled to make changes. Sometimes in the past Chancellors of the Exchequer have become Prime Ministers.
After three days' debate on the Budget one may not think that there is much more to be said on the subject, but during the debate hon. Members opposite have asked what the savings which were to be made would be used for. It was

suggested that there might be some romantic and exciting part for savings, which could be used for some unspecified purpose. As I see it, the savings which we expect to result from the Chancellor's suggestions will be used for rather prosaic things—for the re-equipment of the nation and other expenditure below the line. They will be used for local loans for housing, for new Post Office telephone exchanges, for new towns and for the capital re-equipment of our nationalised industries, such as £80 million for the Coal Board and capital sums for the Gas Board.
Since I have mentioned the Coal Board, I might say at this stage that I am sorry that the hon. Member for Battersea, North (Mr. Jay) is not in his place, because he has more than once made play of why the motor industry did not export more. He hoped that it would export more. Many hon. Members on this side of the Committee, and, I am sure, many hon. Members opposite, would be very glad if the coal industry would export even 5 per cent. of its production.
The savings to be made will be used for re-equipping the railways, for example. Incidentally, I see no reason that in the future our savings should not be used for rebuilding the road and bridge system of the country. It seems to me that that might equally be part of our capital re-equipment.
We have, too, a great task in our Colonial Empire, and last year the loans for colonial development rose from £7 million to £9 million. The only query which I raise about below-the-line expenditure is whether it is proper for us to repay our post-war credits out of borrowed money. It seems to me, from my experience, that post-war credits are used by the ordinary person as revenue, and I should have thought that they might be repaid out of revenue and not out of capital.
We must not imagine, as many people do, that savings are put away in the stocking and not used. They are withdrawn from expenditure on consumer goods and no longer used for buying such things as television sets and clothes, but they are used for capital expenditure. They are still spent on wages and materials, although the materials are probably bricks, mortar and structural steel and not consumable products. As many hon.


Members have observed, our capital expenditure is not keeping pace with that of other countries, and we must, therefore, congratulate the Chancellor upon making this a savings Budget and bringing about a savings drive.
That brings me to my next point, which is that we must see that the savings in future are genuine savings. In post-war Budgets, on top of a revenue expenditure of about £4,500 million we have borrowed each year £600 or £700 million, much of it financed by Treasury bills. That came from the banks and was not genuine saving. To take the analogy of a company, if we continue to increase capital each year by 10 per cent. by borrowing most of it from the banks, is not that bound to have an adverse effect upon the stability of the company? Is it not inflationary?
I was, therefore, pleased to read the Chancellor's remarks about below-the-line expenditure, in which he said that below-the-line receipts
were £219 million, up by £27 million. Payments were £757 million, £19 million less than the forecast. So the total net payments turned out at £538 million, or £46 million less than was expected. As a result of all this, the amount which had to be borrowed was not £436 million as had been forecast. It was £141 million, or £295 million less."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 856.]
That ought to please the hon. Member for Itchen to some extent, since he was worried about the point.
That brings me to a question which will face us in future years—the financing of our nationalised industries, which is a most important, difficult and almost intractable problem. We have to find £350 million each year. If ordinary companies want more money for expansion and development schemes and for new plant, machinery or buildings, they have four methods of raising it. They can raise it out of their own resources, out of profits, which is one reason why profits are necessary in any industrial business; they can raise fresh capital from their shareholders or from the public; they can raise a secured mortgage; or they can embark upon short-term borrowing from the banks. All those methods would have to be undertaken at market rates.
We in the Committee are the representatives of the shareholders in our great

nationalised industries, and every year up to the present we have been voting for them further unsecured loans at easy money rates. I do not think that that will be good enough in the future. We must examine the position and try to pick our policies by which we shall be able to finance the nationalised industries in a way more in keeping with commercial practice. Should not the nationalised industries be self-financing as far as possible? If not, should they not go to the market for fresh capital? There must be some discipline, otherwise we shall find that all the savings made by the public will be swallowed up by the demands of the nationalised industries and there will be little left for other loans or projects.

Mr. Fernyhough: Would the hon. Member also grant the Coal Board the same freedom to charge market prices for its products as the motor car industry enjoys?

Mr. Gresham Cooke: We might well have to examine that question. We certainly have to make the nationalised industries profitable, and I do not rule out any suggestion which may be made.
Despite what has been said by hon. Members opposite, it was with considerable relief that I heard the Chancellor's statement that he hoped to save £100 million this year. My hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) and myself, during Estimates debates and at other times, have made one or two suggestions for economies. I might tell the Chancellor that I was somewhat disappointed that our proposals did not meet with the appreciation and co-operation of Ministers which I might have expected, but it may be that that will be changed in the future. Whatever may be said by columnists and Left-wing politicians, there is not the slightest doubt that in human terms and human meanings high taxation is inflationary.
Companies, professional men, shopkeepers and workers all aim at a net income after taxation. They may have different terms for it. A company may say that it wants a net surplus after tax, a professional man or shopkeeper says that he wants enough to live on, and the worker says that he wants enough "take home" money. The result of all that is


that, when taxation is high, everybody puts his sights higher; everybody wants higher returns and wages. The real difference between the two sides of the Committee is that hon. Members opposite believe in high Government expenditure and high taxation, whereas we aim to reduce it, although we may not be very successful over the years.
Lastly, I shall make a practical suggestion which, I hope, my right hon. Friend the Chancellor of the Exchequer will be able to take up in the next year or two. We ought to aim at bringing down the rate of personal Income Tax to 7s. 6d. in the next two or three years, but for this proposal I ask my right hon. Friend whether he cannot clear the decks by legislative action in the next year or so. The legislative action I ask him to take is to separate personal Income Tax from company Income Tax.
By history, Income Tax on individuals and on companies is intertwined. Income Tax came along a hundred years or more ago, levied on the income of a person, and when limited liability companies came into being the same system of taxation was introduced for public companies. Income Tax on a person is a real Income Tax because it is levied on the income of a person, but Income Tax on a company is not an Income Tax at all; it is levied on the profits of a company. It is levied on the surplus that remains after wages, the cost of materials and the expenses of running the business have been deducted. So that Income Tax in the case of a company is really a profits tax, whereas in the case of an individual it is truly and properly an Income Tax.
If we could separate these two forms of taxation, we could avoid the anomaly that if we want to reduce Income Tax on individuals by 6d. we must do so at the same time by reducing Income Tax on companies. A relief of that extent to individuals would amount to £40 million while the relief to companies would represent £100 million. That must make the Chancellor hesitate very much in thinking whether he can lower the rate of Income Tax on individuals.
If, for the future, we could disentangle the two, we could consider the two different problems—the individual problem and the company problem—and we could adopt the American system of a personal Income Tax for individuals and

a corporation tax on companies and on corporations. If the Chancellor could, in that way, clear the decks by legislative action in the next year or two by separating Income Tax into two parts, we could look forward, in the next two or three years, with a reduction in defence expenditure, etc., to bringing down Income Tax on individuals to the rate of 7s. 6d. in the £.

7.54 p.m.

Mr. William Blyton: I will not follow the hon. Member for Twickenham (Mr. Gresham Cooke) through the ramifications of his Income Tax arguments, but I shall deal with them presently in relation to the coal industry. I listened last week to the hon. and gallant Member for Ilford, South (Squadron Leader Cooper), who made a violent attack upon the coal industry. That attack upon the industry and many more attacks which have been made in the country by back benchers of the Tory Party are making it more difficult for the Government, the National Coal Board and the trade unions to put forward measures to deal with the very urgent problems that are arising in the coal industry.
Neither the Economic Survey nor the Chancellor, in his Budget statement, touched what in my opinion, if we are to maintain full employment and solve the balance of payments problem, are the crucial problems in this vital industry. The industry itself is faced with the problems of recruitment, the proper organisation and deployment of manpower, the retention of its existing manpower, the tempo of reorganisation, the social responsibility of all in the industry, the needs of the country in the next ten years and the alternative supplies or sources of fuel and power for the future.
Today, we have had the Coal Board's plans for meeting the needs of coal in the future. If we have to expand our economy and maintain full employment, the production of coal in increasing quantities is vital. The general trend of output from the mines since 1937 is well known. All I need state is that from 1939 onwards, output reached its lowest point of 174 million tons in 1945. Thereafter, it increased consistently until 1952, when deep-mined production was 214 million tons. In 1953 and 1954, output tended


to drop and last year there was a further decline. At the same time, we have had increased consumption each year and last year we had to import 12 million tons of coal to meet this situation.
No one who is concerned about the future of the country can be satisfied with the necessity to import 12 million tons of coal into Britain. The fact that the losses on the imported coal are charged to the account of the Coal Board represents a heavy drain on the Board's finances, and from the point of view of the financial stability of the country the import of coal imposes a heavy strain on our balance of payments.
Miners believe that a healthy coal mining industry is vital to our economic future. The Coal Board's policy of reforms is in no way motivated by any narrow, partisan aims. It is from this angle that I should like to view the industry, in the hope that we can get some tranquility in the industry and set our sights for the target that we must achieve in the future if we are to maintain economic stability.
There have been various estimates for the next ten or fifteen years in coal production. The first estimate by the Coal Board was a 15-year plan to bring us up to 240 million tons a year by 1965. The speech by the hon. and gallant Member for Ilford, South, who said that he wanted an additional 40 million tons this year, was simply nonsense. The Ridley Committee estimated that we would need an output of 267 million tons and the reply of the Coal Board at that time was that to get above an output of 240 million tons would entail steeply rising costs.
The new plan of the Coal Board has been issued today and we now learn that production will rise to 250 million tons by 1970, involving an expenditure of over £1,000 million. The position revealed in this plan is not the result of nationalisation, but arises from the inter-war neglect of this great industry, which was allowed to shrink, so that now it has to be built up again.
In considering the coal problem, we have to consider what in the next ten years are the alternative supplies of fuel. It is estimated that oil will account for 12½ million tons, but much depends upon developments elsewhere, and one cannot tell what they will be in the years that lie

ahead. Electricity derived from water power and peat cannot make any substantial additions to our fuel and power supply because of the cost of the material requirements and the time it takes to carry out hydro-electric schemes. Large-scale briquetting of peat is not economically attractive against even the prevailing price of coal.
There is atomic energy, but the White Paper tells us that the projects over the next ten years will mean the equivalent of from 5 million to 6 million tons of coal a year, and the cost is estimated at £300 million capital expenditure. This problem has not been debated in our recent economic debate or in this four-day debate on the Budget, but however we view the problem it appears that the mining industry will remain the major employing industry amongst the fuel industries.
It is from that angle that I want to speak about the present situation in our coal industry. There are many criticisms made of the Board by hon. Members opposite, who, mainly because they do not understand mining, do not recognise the great job which the Coal Board has to do. A score of new collieries have to be brought into being, many dozens of pits sunk, more than two hundred reconstruction schemes carried out, while innumerable small projects for improvements and expansions have to be carried out all the time. It represents a stupendous task of planning and execution, and an enormous load upon the technical staff. The most important point to be remembered is that the Board is trying, in the next ten to fifteen years, to make 80 per cent. of the coal mining industry new.
This involves not only the question of providing capital, but the question of providing men to produce the coal. Therefore, we have to look at the manpower problem and recruitment. I have not seen, in the last twelve months, that the Government have done anything to help us about manpower in this great mining industry. They have not in this debate shown they are doing anything about it. Our men are getting fewer each year. I do not want to quote figures, but last year we were undermanned by 21,000 men, according to the Coal Board's estimates of the manpower it needs.
What are the sources of our recruitment? We are getting juveniles at the


rate of 20,000 a year. We are getting only 16,500 from adult British labour. It must be recognised by the Government that there is no obligation upon a miner to send his son into the pits because he worked there. His son is entitled to go into another trade or profession. Therefore, we regard it as the nation's obligation to supply the necessary labour needed in this great industry if we are to solve our economic problems.
The reservoir of labour from amongst the ex-miners has already dried up. There were men who returned to the pits after having been thrown out of the mines in the years of depression between the two wars. We have to face another important fact, that there is per annum a 30,000 turnover of men leaving and re-entering the pits; 30,000 going out and 20,000 coming in. Therefore, while it is important to get the men back we think that the Government must recognise that the important fact today is to retain the existing manpower we have in the pits.
I may be asked, if we are short of labour, what about the foreign labour supply and the Italians? To hear some of the Tories talk on this problem one would think we had never taken any foreign labour. What are the facts? From 1947 to 1948, 15,000 Polish workers and E.V.W.s were recruited. By 1949, there were 14,637 foreigners on the colliery books. In 1949, 2,348 were brought into the pits, making a total of 18,000 foreigners in 1949. That total is now 9,276, who have remained in the pits.
Half of them have gone—not home—but into other industries in England. From 1951 to 1952 Italians were recruited, and 7,500 were interviewed in Italy. Of that number 5,100 were rejected as unsuitable. Of the total number of 7,500, 2,400 were brought to this country. Of those, 164 did not complete their training and 2,230 were available for posting, but only 1,200 were placed in the pits; 37 were placed in ancillary jobs for the N.C.B., 286 were repatriated, 256 found jobs in England in other employment, and 340 were sent to find work in the pits in Belgium. What the cost was of this operation I do not know, but I can assure hon. Members it must have been rather heavy. Altogether,

we have today 10,000 foreign workers on the colliery books.
So whatever the attitude of the men is now, it is wrong to assume that the opposition is because they are foreigners. The union's position is that it has made no final decision in the matter, but I want the Committee to be under no illusion that the districts where these men will be employed are dead against the proposal. Those places have hundreds of foreigners in their midst. Having regard to previous experience, and if there were no difficulty in placing these men at the pits, we would have to interview at least 30,000 Italians to get 10,000. Then we should have to train them and teach them English, which takes a year. We would have to anticipate a wastage of 10 per cent.
This is not the way to settle the manpower problem in British mining. Why can we not have Britons for British pits? Is it because the work is too hard and dirty, or is the industry still not attractive enough? How can we expect people in the mining villages to work in the pits if they are not able to get a house? Yet if people come from Italy into their areas, under the Government's new housing Measure providing for building for those coming from outside to Development Areas, the Italians can get a house. Furthermore, there are the social problems which arise in the mining villages. It was because of all this experience that the great opposition arose in regard to this problem.
To be quite frank, we want British labour in British mines. We say to the Government that if they want to see this industry built up in its manpower, it must be understood by the people of the country that it is only by British labour coming into the pits that we can solve our balance of payments difficulties, maintain full employment, and ensure that the country gets sufficient coal in the years that lie ahead.
Turning now to another subject, we have been pressing in this House for a long time for the Government to do something for the old workmen's compensation cases under the old Workmen's Compensation Act. They have had no increase in their basic rate of compensation since 1942. A single man gets £2; a married man, 50s.; a married man with


one child, 55s. Those are men injured in industry, permanently crippled for life.
We have asked the Government until we are tired to bring these men's rates at least up to the same rate of pay as those who are injured now enjoy under the National Insurance (Industrial Injuries) Act. We have had no reply. The Government will tell us nothing. I do not know whether they have even considered it. There are 45,000 of these men. If it had not been for the National Insurance (Industrial Injuries) Act covering injuries received after 1948, and had all those people been governed by the old Workmen's Compensation Act, that Act would have been so discredited by now that the Government of the day—no matter who they were—would have had to raise the rates.
These forgotten men, men who were injured before 1948, have had a raw deal. My concluding words to the Financial Secretary are these: that the Treasury should do something for these men who were permanently injured in employment and who have not received a penny on their basic compensation since 1942.

8.14 p.m.

Mr. B. Godman Irvine: Earlier this afternoon the Economic Secretary set out various reasons why we should save, one of them being that we should save for old age. In my division I have a great many people who have done exactly that; but they come and see me at various times and they tell me of the difficulties which they face today. I would urge upon the Financial Secretary that he should ask the Chancellor to bear in mind the difficulties which these people are facing today, because if there are a great many people who are disgruntled after a lifetime of saving it will mean that the Savings campaign is not going as the Government desire.
The hon. Lady the Member for Tyne-mouth (Dame Irene Ward) and my hon. Friend the Member for Ilford, North (Mr. Iremonger) both made speeches on this point, and I would commend both those speeches to the attention of the Financial Secretary, because they did set out the kind of problem which I have to face in my division. The hon. Lady quoted one case in her constituency where someone had to live on £271 a year. I

can assure the Committee that there are a great many of my constituents who would regard that as very considerable affluence. Somebody came to me the other day and told me that at the end of a lifetime of saving he had £700 in the bank. I would ask the Financial Secretary to consider whether it would be possible, in a future Budget, to give that type of person some consideration.
I am particularly pleased to see the Financial Secretary with us at this moment, because I know he is the expert on the Front Bench on the subject of "sophisticated" cider. We had a sample of sophisticated cider produced in this Committee on Thursday. I wonder whether the Financial Secretary was aware that that sample was probably from a pre-Budget supply? According to my information, there is only one company which is quoting deliveries of cider which will be covered by these new procedures, and that company happens to be in my division.
I know that the Chancellor is trying to persuade us to import less. I wonder whether the Financial Secretary or the Chancellor is aware that there are a great many people who make cider in this country from apples which are imported. Apples are imported from Normandy, and, provided they go to a registered cider producer, those apples pay no duty at all. In addition to that, as must be well within the knowledge of the Financial Secretary, British wines are, in fact, made from imported must, which is once-pressed skins or raisins. The company of which I am speaking uses nothing but British apples. During last year, that company used 2,500 tons of fresh apples; and if those apples had not been used for that purpose they would probably have been wasted.
Would it be possible for the Financial Secretary to ask the Chancellor whether he would consider the possibility of reducing the tax to, shall we say, 7s. 6d. a gallon in a case where the manufacturer could prove that all his products were produced in this country?
Next, the Chancellor mentioned that there was a distinction between traditional beverages and "sophisticated" products which are—and I quote his words—
… made—I am told—from a wide variety of fruit and vegetable."—[OFFCIAL REPORT. 17th April. 1956; Vol. 551, c. 883.]


I am informed that any such product made from fruit or vegetable other than pears or apples, in the way the Chancellor mentions, is already covered by current tax provisions. Therefore, there is a passage in the Chancellor's speech which appears to have been based on a misapprehension, the result of which is that the company of which I am speaking feels that there may be some misapprehension that their products do come from vegetables or something else. It would perhaps be appropriate if the Chancellor could explain just what is meant by the passage to which I have just referred.
Under paragraph (b) of the second Budget Resolution there is a provision that anybody who has purchased cider or perry prior to 18th April will not require an excise licence to sell the cider up to 18th July. As the Committee will be aware, Brewster sessions are held in February. Therefore, many beer houses and off-licence premises, whose licences for the coming year have already been granted, will be precluded from selling the products which are covered by the new tax unless the licences are amended.
I wonder whether it is the intention of the Chancellor that these products should be kept off the market until after next February in those places which do not possess the appropriate licence, or whether my right hon. Friend will consider inserting at a later stage in the Bill a provision which will enable current licences to continue in force until next February, so that those concerned can continue to sell the products which they have been accustomed to sell.

8.21 p.m.

Mr. Robert Woof: Like all other hon. Members, I was deeply interested in what the Chancellor of the Exchequer had to say in introducing what I would describe, in Tyneside vernacular, as a "snowball" Budget. It was in line with Tory policy of capitalist veneration and it all reminded me of the history of that king of Spain who had his beard singed. He took everything from everybody in the known new world at that time and left himself in the most precarious position of not being able either to buy or sell.
The Chancellor said that his main proposals could all be summarised by the word "saving". He offered the slogans:

Save to Fund: Save for Solvency: Save for Security.
The right hon. Gentleman also suggested that we should
… save to be great."—[OFFICIAL REPORT. 17th April, 1956; Vol. 551, c. 874.]
That is very nice indeed, especially for those who are in a position to save, but I am very much interested in what the right hon. Gentleman did not say.
The right hon. Gentleman did not tell us how those of the lower stratum of wage earners in the working class can save. It seems that they should get accustomed to the famous words:
Theirs not to make reply,
Theirs not to reason why. …
Theirs is to do the rest—the only thing left for them and expected of them—that is to pay, whether it be through the nose or on "tick." They have to pay dearly in relation to their low incomes. We should concentrate our thoughts on these members of civilised society. After all, the vast majority of them ask for very little. Many of them are quite content and happy to pay their own small way.
The Government themselves admit, in the White Paper on the Economic Implications of Full Employment, that
the spiral of rising incomes and prices is a cause of considerable personal anxiety and of an acute sense of social unfairness. The difficulties and hardship inherent in such a situation bear most heavily on those dependent on fixed incomes, who are in continuous danger of having their standard of living personally reduced.
No one can deny that, because it is the effect and outcome of the present Government's policy.
Many of my constituents in Blaydon work in and around the City of Newcastle, and they travel to and from work by bus. Consequently, they are at the mercy of the regulations imposed by the bus companies. Most of my constituents are in the lower stratum of wage earners and all of them are subject to a reduction of their incomes as a result of the constant applications by the bus companies for permission to increase fares. These applications are upheld by the Traffic Commissioners and I wonder whether, like "Mrs. Dale's Diary," this is going on for ever. Some of my colleagues on the local councils say that it is a racket. It is a glorified version of Oliver Twist asking for more.
One person in writing to the Press had the wit to compose a little ditty, a verse of which runs as follows:
You pay eighteen bob and what do you get?
Another journey ticket and deeper into debt.
What's the use of travelling each day
If all that money comes out of your pay?
One can just imagine the effect of an appeal by the Chancellor on behalf of the Government, to these people to save. It cannot work with them. It may work with the bus companies. If it does not, it ought to do. Here are the net profits over the last three years of one bus company. In the year ended 31st December, 1953, it made a net profit of £264,642; in 1954, it made £281,719; and in 1955, £342,415. Profits are going up and up and wages are going down.
This is a spiral to which the Government ought to pay more attention. It is bad enough having a double dose without having it rubbed in. When the Labour Government were in office there was a suggestion to nationalise the bus services. What happened? Every time we sat in a bus we could not look out of the windows because they were pasted over with bills appealing to passengers to join O.P.P.A.—Omnibus Passengers Protection Association. Since the Tory Government came to power those posters have passed into oblivion and it would be interesting to know what has happened to that wonderful organisation. Of course, we know the answer: they are getting what they wanted. The buses were not nationalised.
To quote his own words, the Chancellor said in his Budget speech:
… it will be a far better thing when the habit of saving has been so rebuilt and reinforced that a Chancellor can begin to reduce the terrible burden of taxation …"—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 873.]
We on this side of the Committee have come to the conclusion long since that if this Government, and the responsible Departments, got into the habit of a better balance of fair play and gave these people a better opportunity, they might be able to save a little and then in all probability the Chancellor would get what he is seeking, an opportunity to reduce taxation.

8.30 p.m.

Mr. William Shepherd: I have listened with interest to the plea made by the hon. Member for Blaydon (Mr. Woof) for, I imagine, a reduction of taxation on fuel oil for transport purposes, and I have no doubt that my right hon. Friend, who is present, listened to it also.
In the short time at my disposal I shall make a number of points about what we may or may not have learned in the last few years about how to conduct our affairs. First, I feel that the implementation of the Millard Tucker recommendations affecting pension rights has not been sufficiently noted and praised by the Committee. That is a substantial action on the part of my right hon. Friend. In all the circumstances it is a brave one, and I think it commands the assent even of those not personally affected. I hope, therefore, that the country will appreciate the value of that proposal because it rights a clear injustice.
The second point for which I praise my right hon. Friend is that in future he is to provide us with better statistics. I must confess that I have been depressed in the past by the opposition of some of my hon. Friends on this side of the Committee to the provision of statistics. There can be no justification for objecting to the supply of proper figures relating to an economy, particularly to our economy. Why is it that people in this country see no necessity for statistics whereas the Americans surround themselves with a wealth of them? I cannot understand it. The Americans could afford to ignore trends in their economy because probably they would suffer very little damage as a consequence. Here, however, relatively minor alterations in the economy are vital and could be disastrous. So I hope that my right hon. Friend will not be deterred, either by the "blind" men in industry or in politics, from providing us with the best information possible as to the trends in our economy.
I do not object to the innovation in the financing of nationalised industries. I see the reasons for it. May I say, briefly, in passing, however, that it fortifies my own view, which I expressed last year in a letter to The Times. I believe that we


have entirely misconceived the pattern of our nationalised industries. The idea that some of the advantages of private enterprise can be gained by putting nationalised industries in the form of State corporations has not paid us and must inevitably fail. I hope, therefore, that the step taken by the Chancellor will be the forerunner of something much more substantial, namely, that the nationalised industries should be brought within the jurisdiction of the House of Commons, under the control of Ministers, where they rightly belong.
There is one exception, namely, the air Corporations, which I feel should be pushed the other way. [HON. MEMBERS: "Why?"] I should like to see them put under an organisation similar to British Petroleum—

Mr. Rankin: No.

Mr. Shepherd: Now I come to the main point of my speech, namely, defence expenditure. I am convinced that we are nowhere near exhausting the possibilities of reducing that expenditure. I want to see from the Government more brutality on this issue. I am sure that the result of using the normal channels to decide the minimum required for defence expenditure is the provision of more than is strictly necessary. What I want, if I can get it, is more brutality from the Chancellor. I do not think we can compete with the Germans when we find that they spend only 4 per cent. of their national income on defence whereas we spend 8 per cent. I believe that we could get better defence at a lower cost.
The right hon. Member for Huyton (Mr. H. Wilson) made great play about the manner in which we were failing in terms of investment. He gave figures to show that, according to the E.C.E. Report, Germany invested 15 per cent. of her national income in the form of net investment and the United Kingdom only 6 per cent. I do not wish to play down those figures at all, but I would urge the Committee to look at them more closely and to realise that they disguise the extent to which we are investing in industry.
In the first place, the figures are net and not gross, so they do not include depreciation, and if one's industry is larger one fails by comparison on that score. More important than that, the

latest figures in the E.C.E. Report show that investment per capita was greater during last year in this country than in Germany. I mention that to help to balance the somewhat distorted picture which has been painted by successive speakers from the Opposition Front Bench. It is not because I am satisfied with our rate of investment, but I think we ought to make it clear that the per capita investment in industry in this country last year was greater than that in Germany.
I want to speak primarily about what we have learned during the last ten years under different Governments and with a variety of ideas being exploited and with a variety of experiences of different kinds. It is true that most of us have now lost our faith in economists. If we have learned one thing in the last ten years it is that the forecasts of economists are highly suspect. I was amused during the weekend to read the view of someone that Keynes might have done a lot better. I remember the last article which he wrote in the Economic Journal; it was one designed meticulously to show that in the post-war years there would be a surplus of dollars. One sees that even the elite in that profession are not free from a very wide margin of error.
One thing proved by the history of the last ten years is that we are in an economy which is affected by very minor marginal influences. We ought not to forget that. If that is the situation, the one thing that we must not have is an optimistic Chancellor. Optimism on the part of Chancellors ought to be prohibited. I have been watching these matters ever since the time of office of Sir Stafford Cripps, and I have seen Chancellors tackle difficult problems and get a little success and then imagine that they were on the crest of the wave and that all their troubles were over. In 1948, I had to say about Sir Stafford Cripps that I preferred to see him in a hair shirt rather than in the many-coloured garments of optimism, and he was not a man given to natural optimism.
The greatest lesson to be learned from the past ten years is that we cannot afford foolish optimism. We should be cheerful about our prospects, but we must realise that a minor or temporary success may well, in a very short time, give way to an entirely different situation. This country will have a long, long pull. Unless


we are favoured by technical developments of a transcending character or unless there is a very continuous expansion of world trade, it is possible to look on the next three or four years as periods of considerable difficulty.
One of the thing that have struck me during the last ten years is that we seem, on the whole, to have been favoured by fortune—

Mr. Ellis Smith: And hard work.

Mr. Shepherd: —and by hard work, as the hon. Gentleman says.
I hope that fortune will continue to favour us, but it would be unwise to bank on it continuing. What has struck most of us in those years has been that inflation has been a much bigger difficulty to handle than we ever thought that it would be. When one casts one's mind back to the struggles of the 'thirties, dealing with inflation would appear to be a very simple proposition. Clearly, however, it has become a much more substantial problem. I will say a word about that in a moment.
The second thing that we have learned is that Socialism and rigid controls have also failed to deal with the situation.

Mr. Ellis Smith: That is a point of controversy.

Mr. Shepherd: I do not want to become too controversial.
The third point of substance is this. The experience of the last ten years has shown that while inflation has been difficult to deal with, and while the Socialist concept of physical controls fighting an inflationary policy has got us nowhere, it is nevertheless the case that there can be no favourable prospect in a laissez-faire economy in this country in the next few years.
Ours has to be a carefully-nurtured economy for some time to come, and anyone on this side of the Committee or on the other side who thinks otherwise is, I think, really confusing himself and doing a disservice to the country. I believe that a free society in a free economy is best suited to this community, and as one that will produce a bigger and greater variety of incentive in this nation as a great exporting country.
But I do not necessarily believe that the pursuit of freedom is the most necessary objective of our policy at the present time. Indeed, I believe that we have pursued freedom too fast in many respects. I think that there has been a policy of too much freedom in trade. I am convinced that before we get our balance of payments policy right we have to look to our trading policy and the Ottawa Agreements and make provision along those lines if we are to get our balance of payments policy on any permanent basis.
Therefore, I say that while our objective ought to be a free economy in which we have the widest possible measure of freedom for our citizens—I believe that by people pursuing their business relatively unhampered they will achieve the best for society as a whole—I would not say that one must rush and try to gather all the freedoms at once.
I am not panicky at the thought that we might not succeed in finalising convertibility in the next four or five years. I do not believe in that as much as I believe in building up our gold and dollar reserves. I do not think that minor controls or strategic controls should be avoided if they can be seen to be necessary for the country's welfare. It is one thing for hon. Members opposite to put on physical controls and then fight them with wild inflation. It is much more sensible to have monetary and other restraints, and perhaps a measure of strict control.
I urge my right hon. Friend to have the courage to do the things that are necessary in the interests of the nation and not to fear and not to be dogmatic in any way, because Conservative dogmatism can be almost as dangerous to the country, but not quite, as Socialist dogmatism. I want to see a proper appraisal of the problems as they come along, and the remedies applied in the light of prevailing circumstances and not in the light of any dogma.
I say that this situation is not a particularly encouraging one for the British people. We have had a lot of disappointment and setbacks over the past ten years, but I do not believe that we are in any way licked. I believe that there is an enormous reserve of energy and capacity in this country. I do not believe the silly tales I hear about the


workmen of this country, mostly written and spoken by people who have never worked in their lives.
I believe that we have enormous resources. We have a great Commonwealth, with its fund of good will and its sources of markets, and we have political stability at home and a great fund of common sense. It is true that we are in difficulties, but I think that we can get out of them by good work, good sense and good Government.

8.45 p.m.

Mr. Hugh Dalton: The time has come, after four days' debate, to gather up the threads of the discussion and particularly for the Chancellor of the Exchequer to reply to the many questions—or, at any rate, I hope to a high proportion of the many questions—which have been put to him from all sides of the Committee. In the judgment of most of us, this has not been a very exciting Budget as Budgets go and I will, therefore, begin with the Premium Bond in order to brighten as much as may be the subject as a whole.
I am very glad that the hon. Member for Louth (Mr. Osborne) has now entered the Chamber, because he has made a very important contribution. I read with great interest, as we all did, the speech of the Financial Secretary to the Treasury. This has been referred to, but not hitherto quoted. It was the speech which he made at Hampstead, on Friday night, when he said that the proposal to issue Premium Bonds was
Much the most controversial and dazzling of the Budget plans.
A character of Shakespeare once asked:
Dazzle mine eyes, or do I see three suns?
This, no doubt, is the atmosphere designed to be created by this proposal. Some will see "three suns" but, later, will find that they have been deceived.
The Financial Secretary to the Treasury continued rather pessimistically. He said:
This idea is cutting right across party lines and no one knows what will happen to it—
this dazzling idea put forth by the Chancellor of the Exchequer.
No one knows,
said his lieutenant,
what will happen to it. If this plan does not go well, it will have to be dropped.

said the Financial Secretary to the Treasury. He was referring to his chief when he said:
He knew and I knew that this scheme would be severely criticised by a large section of the people who sincerely think that this is the State going into the gambling business.
I think that that is a rather low-toned defence of this dazzling conception and I dare say that disciplinary rebukes were administered to the right hon. Gentleman within the Treasury. But he is quite right. There is no doubt that this proposal—I do not now speak of its merits or demerits as I view them—cuts across party lines.
The hon. Member for Louth made a most interesting speech the other day. I only regret that I did not hear it, I had to be away, but I have read it with great attention. The hon. Gentleman said that he thought it was a bit "off white." The hon. Gentleman also quoted some words of Sir Austen Chamberlain—some solemn words. In the recorded utterances of Sir Austen Chamberlain it is difficult to find many words that are not solemn. But in 1919, when he met a proposal that Premium Bonds should then be established, Sir Austen Chamberlain said:
At a time when the one lesson you have to teach everybody is that there is no salvation except in work, you teach them to expect salvation by luck.
This sombre warning from beyond the grave will, I am sure, be heeded by the right hon. Gentleman when he reconsiders the opinions, voiced by hon. Members on one side and the other, as to whether or not he should proceed with this proposal.
I have read in a Sunday newspaper, the Observer, something which led me to think that perhaps the right hon. Gentleman had a social motive in bringing forward this proposal now. I believe that in Russia they have something of this kind. I read in the Observer that in the Russian savings banks, if you open a savings account as a depositor, you get 2 per cent. interest on the money; or you may waive the interest in order to take part in the semi-annual bank lottery—which is very nearly this proposal.
I wondered whether perhaps the right hon. Gentleman was seeking a talking point with our two Russian visitors. Indeed, I read in the Press that he and


Mr. Khrushchev sat together at the Mansion House side by side and that they were both deeply disconcerted—so says the Press—by the television arc lights. But it may have been that during this conversation a common point was found in discussing this topic in the light of Soviet experience.
I associate myself with the advice given on Wednesday by my right hon. Friend the Member for Huyton (Mr. H. Wilson), who suggested that the Chancellor would do well to explore a little further the extent to which organised bodies of opinion, and representative persons such as Lord Mackintosh—perhaps the right hon. Gentleman will tell us something of this later—and the great body of his devoted workers, whom we all support in the Savings movement, are affronted and disconcerted by this proposal and, also, what are the views of other persons, representing the Churches and other organisations of important opinion. The advice which we offer to the right hon. Gentleman is that he should make sure of this ground before proceeding any further with this plan.
Suppose, after this further sounding of opinion, that the right hon. Gentleman is satisfied that this plan should be proceeded with. We would then further advise him that he should embody it, not in the Finance Bill, but in a Bill which the Joint Under-Secretary of State for the Home Department announced in the name of the Government a little while ago. That is a Bill to be introduced in pursuance of the recommendations of the Royal Commission on Betting, Gambling and Lotteries to establish registered offices to legalise off-the-course betting. I express no views about the merits of that, either.
But, clearly, it is into such a Bill as that that this proposal would most conveniently fit. It has nothing in common with the rest of the provisions in the forthcoming Finance Bill. It is, if I may say so, merely an administrative variant of the other proposals in the proposed new Bill, and it may well be that legalised betting shops would be equally convenient for buying Premium Bonds as for betting on horses and other forms of off the-course betting. There is a certain similarity in this conception and there

may well prove to be administrative saving in having one betting shop under the control of the Postmaster-General for the transaction of both branches of this betting business.

Mr. Cyril Osborne: Would it include stakes places on the Labour Party treasurership?

Mr. Dalton: Certainly. Were this legalised, were the whole thing legalised. I should be willing—for a consideration—to advise those who wish to place money on any of the candidates for this or any other office—[HON. MEMBERS: "Oh."] But that we could consider later. So much for the Premium Bonds. I am sure that the Chancellor will further enlighten us as to his intentions in this matter.
I now pass on to some of the fiscal measures. I welcome very much the increase in the Profits Tax. This tax was invented by me, for good or for evil, in 1947—[HON. MEMBERS: "Evil."] Then I hope that the hon. Gentlemen who say "evil" will vote against this particular part of the Chancellor's proposals. It was invented by me as a successor to the war-time Excess Profits Tax which, in my opinion, had no peace-time recommendation.
I am delighted that both the present Lord Privy Seal and the present Chancellor have followed the lead which I then offered, of a tax on profits in addition to the Income Tax, in view of the fact that profits tend to rise so very much faster than other forms of investment income I thought it was rough justice to people with fixed interest securities, and it also seemed to me that it was in the national interest that there should be encouragement for profits to be ploughed back into industry rather than that they should all be dished out to shareholders. This it was designed to assist by the differential element in the present Profits Tax, and it gives me particular pleasure that two successive Conservative Chancellors of the Exchequer have come down on my side and against, so far, the recommendations of the Royal Commission on the Taxation of Profits and Income. They put up a long argument, which seemed to me inconclusive, in favour of substituting for the present Profits Tax a flat rate tax which would not distinguish between distributed and undistributed profits.
That argument seemed to me to be reactionary in policy and wrong in logic, and I am very much encouraged by the fact that the right hon. Gentleman has even improved upon the record of his predecessor, the present Lord Privy Seal, and has followed my lead in this matter. Let me add that, even after the increases in the Profits Tax that have been made twice within a year, the rates remain essentially moderate, so that it would be possible in future, if the fiscal necessity should arise, to increase them still further.
Having welcomed that, I am afraid that many of my other comments will be less complimentary. With regard to the Tobacco Duty, it would be quite wrong for me to allege that there was never a case for increasing this duty. Indeed, I must say—what I think would be the commonsense view—that whether or not in any coming Budget this particular tax should be increased, diminished or left alone must be judged on its merits in relation to the fiscal conditions of the year.
But I am very much disturbed and shocked by the decision of the Chancellor this year not to continue the practice, again initiated in the Finance Bill of 1947 and continued by the late Sir Stafford Cripps when he made a further increase in the duty a year after, of extending the relief from the tax to old people which entitled them to continue to obtain a very modest ration of tobacco at the earlier and lower prices.
It seems to me that that is a very mean departure from what I had hoped had become accepted practice in this case. I hope that even now this is one of the things put into the Budget Statement in order that, when the Committee stage of the Finance Bill is reached, an appearance of generosity and conciliation may be exhibited, and that if we press hard enough now, later the Chancellor will repent and agree to continue in this respect the practice of the late Sir Stafford Cripps and myself, and will not seek to make at the expense of the old people a very mean and trumpery saving.
To bring his attention to this matter, I will repeat the question which has been put to the Chancellor already. Out of the expected additional yield of £28 million from Tobacco Duty, how much or bow little of it is due to the fact that this concession to old people is not to be

extended on the previous lines? Let us know how much it is that is being saved by what seems to me to be a most reprehensible proposal.
The old people are getting nothing out of the Budget, and, indeed, getting less than nothing, because increased prices are to fall on them from the discontinuance of the bread subsidy and the additional charge for tobacco, in so far as they are smokers. The old people are the most hard hit of any section of the community, under this Budget.
I hope that the Chancellor will make a statement about this mysterious £100 million saving this year out of some Estimates somewhere, somehow. The Lord Privy Seal declared last year that no further economies of any magnitude could be got without major changes in policy. He emphasised "major". He certainly had a long opportunity to study these matters during the years he was at the Treasury. The Financial Secretary to the Treasury also warned us that the economies would involve "changes in policy." I am quoting from the speech he made last Thursday.
Even if all is not yet tidied up and some colleagues are resistant, and complete harmony is not yet established between the Treasury and the spending Departments, none the less the Chancellor owes it to the Committee to give us an indication of where, at any rate, the major part of this £100 million is coming from. It is a large sum. There are many possibilities, such as the National Health Service. The Guillebaud Committee could be disregarded. If the Government can go against the Royal Commission on Income Tax and Profits Tax, they can go against the Guillebaud Report on the Health Service. Is it intended to follow out some of the pre-Guillebaud thoughts on the Health Service?
Then there are the housing subsidies. Can the Chancellor assure us that he has gone quite as far as he intends in the reduction of these? There was a bit of a Press campaign to get "something bolder" before the Housing Subsidies Bill was introduced. What about education? Are we to make economies by postponing further the beginning of the school building programme? Is that excluded? Then, of course, there is defence. It has been suggested by some hon. Members that the whole defence


Estimates had become more "phoney" from year to year, always stuffed with a lot of padding which can be taken out by not spending. Is that barred? I am only asking; I am in a purely interrogative mood. The Chancellor should satisfy a curiosity which is not confined to this side of the Committee.
I have given an undertaking to the right hon. Gentleman about the length of my speech. It is only fair that he should have much more time than I, because he has much more to answer for than I have. [HON. MEMBERS: "Oh."] I think so. I was just going to say a word or two about the National Debt and other debts, and it may conveniently conclude my inquiries. The Chancellor had a very interesting passage in his Budget speech on how the National Debt had gone up and up and up, as a former Prime Minister would have said. It was all very interesting, though it failed to take account of the variations in the value of money century by century. Otherwise, the comparison was most exact. He was not, of course, putting a precise and scientific comparison, but it was very interesting.
The cost of the National Debt has risen steadily under the Tory Government. "Your debt will cost you more under Tory rule." Talking only of the interest charge, last year it cost us £38 million more than was estimated. I hope that the Estimates are better this year, otherwise it will offset much of the mythical £100 million savings. Last year the Estimates were out by £38 million. We paid £38 million more in interest than was expected, largely, I think, because of the floating debt and the continuing rise in the Treasury bill rate.
This year, according to the Financial Statement, we are already committed to a further increase of £32 million, and the total cost above-the-line will be £670 million. The Chancellor was asked—and I should like to re-emphasise the question, and I hope he will be able to answer it whether this year's estimate assumes that the Treasury bill rate will run at the present level of just over 5 per cent. throughout the year, or whether it is assumed that there will be some other average rate, up or down.
I have spoken only of the National Debt and of above-the-line expenditure, but many other charges, some of which I

will mention in a moment, fall very heavily upon borrowers in many other sections of the national economy. Since the Conservative Government came into power we have been committed to ever-rising rates of interest all across the economic field. I heard a nostalgic cry from the hon. Member for Skipton (Mr. Drayson); he said, "2½ per cent.". For the time being, under Conservative freedom, all that is gone. We are committed to high rates of interest on all classes of loans and securities and even high rates for private companies borrowing on fixed interest securities, preferences or debentures. All these rates are steadily rising year by year. Where is this rise in interest rates to end? In the Chancellor's view, is there any limit in sight? Where is the ceiling?
The rate of interest on the floating debt is now more than 5 per cent. Throughout the whole period of the Labour Government, under three successive Chancellors, it was only ½ per cent. Interest on the floating debt, therefore, is more than ten times what it was. Can the Chancellor and his colleagues be quite sure that so immoderate a rise is in the public interest? The Bank Rate is now 5½ per cent., more than twice the 2 per cent. Bank Rate which endured not only during the term of the Labour Government but for over twenty years and which came to be regarded as normal from the time when Neville Chamberlain carried through his major conversion of War Loan in 1932 to 1951. It endured from 1932 to 1951. Now the Government have jumped it to more than double that rate—more than double a rate which held for twenty years in war and peace under Tory and Labour rule alike. Is that a satisfactory achievement?
Local authority loan rates have risen. The rates of the Public Works Loan Board are now well over 5 per cent., whereas, as the hon. Member for Skipton rightly reminded me, 2½ per cent. was the rate at which they borrowed in the early post-war years.

Mr. G. B. Drayson: I wanted to remind the right hon. Gentleman of the effect of the 2½ per cent. Treasury bonds in which investors lost half their capital.

Mr. Dalton: The hon. Member cannot even describe this security accurately. It


was not a Treasury bond. It is true to say that all these various classes of security move up and down together, and when had they their most precipitious fall in the security market? The security affectionately known by my name, that known by Goschen's, and the 3½ per cent. War Loan which history may appropriately describe as "Chamberlains"—they all move up and down together. They came down in terms of market value most steeply when Conservative freedom dawned, and they show not much sign of recovery yet. These historical excursions are most interesting and I would be prepared had I more time, to elaborate them further. But perhaps another opportunity will come.
I say very seriously to the Chancellor that the effect of these high interest rates in many directions is very wounding to the economic interests of the country. I think it is high time for a further inquiry. I was very glad to hear the Chancellor say that a proposal has been made to him that an outside committee of people not in the Government service should be appointed to advise him what to do, but, remembering the fiascos of the Geddes and May Committees of the past, I was delighted to hear the right hon. Gentleman repudiate that proposal and to hear him say, most truly I thought, that Ministers in high office must carry their own responsibilities, make their own inquiries and conduct these investigations themselves, through instruments chosen by them, whom they judge to be competent and impartial counsellors.
The time has come when it is most important that our whole monetary policy should be looked at again. It is undiscriminating, it is operating in the most unselective fashion and it is falling alike upon the just and the unjust. All sorts of little people are being squeezed to death and all sorts of big people who can stand that degree of squeezing are getting along very nicely.
The continual raising of interest rates is doing two things. It is further distorting the distribution of wealth, continually enriching the people who lend money at the expense of those who borrow it—[HON. MEMBERS: "Oh."] Is it not? It is a matter of arithmetic. It is further distorting the distribution of wealth and it is certainly putting a great impediment upon the production of new wealth in many

departments of the economic life of the country. As has so often been said, it is important both to distribute the wealth that we have more fairly and greatly to increase the wealth to be distributed. These continually rising interest rates are doing damage to both these national interests.
The monetary policy, as we know it now and as we watch it in operation, appears to be running wild. It is high time that a further investigation was made and that it was ascertained how, while providing for a reasonable degree of credit control, we should, at the same time, establish priorities in the national interest, to assist with lower rates of interest those borrowers who deserve it, and also to check the continual deterioration in the distribution of wealth, including the heavy capital gains which are being made from time to time as a necessary consequence of the present monetary policy.

9.13 p.m.

The Chancellor of the Exchequer (Mr. Harold Macmillan): I should like to start by paying my tribute to one of the best maiden speeches that I have heard in the House of Commons. When my hon. Friend the newly-elected Member for Taunton (Mr. du Cann) rose in his place, I confess that I was a little nervous. I feared he might have some criticism to make of the new arrangements for the taxation of cider and perry, but I was glad to find that that was not so. He dealt lightly but with a very sure touch on a number of important topics, and both the content of his speech and the form in which it was cast will make him a very valued participant in our debates in future. I congratulate my hon. Friend on having successfully surmounted the most difficult obstacle that a new Member has to meet.
The Manchester Guardian declared at the end of last week that the Budget debate was dying of inanition. Never, it wrote, was there such beating of the air. There is no reason for the Government to complain of such a situation. If their proposals are inadequate or unwise or unfair, criticism is bound to be concentrated and violent, but I have had the impression throughout that any indignation has been rather unreal. At any rate, No Chancellor should complain of this headline taken from the same newspaper:


Debate on Budget Falls Flat.
That is not to deny that there have been some very gallant attempts. The right hon. Member for Huyton (Mr. H. Wilson) opened the attack with a most entertaining and a most witty speech. It must have given him great pleasure to compose, and I can assure him it gave great pleasure to listen to. Some of his epigrams will be long remembered. Nor shall we allow the Economic Secretary to forget his nickname. But what was the conclusion to be drawn? Surely that the right hon. Gentleman attempted to cover the nakedness of his argument by the brilliance of the clothing with which he decorated it.
Of course, the right hon. Gentleman was always rather a nimble performer. He has appeared in many rôles in his short period as a member of this Committee. Sometimes he is a Left-wing reactionary — [Laughter] — a Left-wing revolutionary: he will end up as a reactionary, I am sure. Sometimes he is practically driving a tumbril, and sometimes he affects the part of a moderate and reasonable statesman, with his eye on the Government Humber. In any event, he skips from band wagon to band wagon with remarkable agility. If he is not exactly a leader of political thought, he is a most useful barometer.

Mr. William Ross: Let us have some facts.

Mr. Macmillan: I shall deal with the speeches as they were made.
My conclusion from his speech was that the Socialist Shadow Cabinet had met after the Budget and had for once come to an unanimous conclusion: there was not much to be got out of the Budget for the Labour Party; it was sound, sensible, and likely to be popular; and, therefore, the best thing to do was to call it flash, irrelevant and squalid, and let it go at that.
Right hon. Gentlemen on the benches opposite in their various ways followed much the same tactic. If the right hon. Gentleman the Member for Huyton was brilliant and coruscating, the right hon. Member for Smethwick (Mr. Gordon Walker) was dark and sombre. The right hon. Member for Rochester and Chatham (Mr. Bottomley), whose speech, I regret to say, I did not hear, though I

sent him an explanation of why I could not be present, was, as he always is, thoughtful and helpful. Perhaps he will allow me to say that I do not think he was as fair as usual in his sweeping attribution to Conservatives of motives of selfishness and cynicism in contrast to the pure idealism of all Labour supporters. The truth is that we are all fellow countrymen and much of a muchness. Our quarrels are family quarrels. If an outsider attacks us he finds out what our real unity is.
The right hon. Member for Battersea, North (Mr. Jay), who opened today's debate, was as pessimistic as ever. I do wish he could cheer up a bit. He always reminds me of one of my favourite characters, in fiction, Mr. Miserimus Doleful. If he could forget the sorrows of the world for an hour or two and go to a really nice party with, say, the right hon. Member for Ebbw Vale (Mr. Bevan), it would do him a lot of good.
I was very glad that the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) was allowed to wind up the debate—and that in spite of Easington and all that dwells therein. Bishop Auckland is poles apart from Battersea; if Battersea goes in for austerity, Bishop Auckland goes in for jollity. The right hon. Gentleman is the Mark Tapley of Socialism. The right hon. Gentleman and I have sometimes been opponents and sometimes, I am happy to say, colleagues, for many years. I have always admired his courage and buoyancy. In spite of Easington, age cannot wither him. It was quite clear what he thought would be the best plan in the circumstances and we have just seen him carry it out: if his colleagues as a whole had no stomach for the fight, nevertheless he would give them a good, jolly, hearty, rollicking time in his winding up speech. And very well done it was.
Finally, I turn to the criticism made by the Leader of the Opposition. He is not in his place, but he has, of course, explained to me the reason why. In his short and rather patronising speech last Tuesday, he observed that this was not an inspiring Budget. That was a rather curious phrase, coming from his lips. It would be interesting to know what was his idea of inspiration in relation to Budgets. He and I have so far introduced a Budget apiece, so we are quits


on that; but let us take a quick look at his Budget, in loving retrospect—a "flash-back", I think it is called. There was 6d. on Income Tax, on all rates, standard or reduced. Purchase Tax was doubled on cars, wireless sets and refrigerators. Petrol tax was up. Profits Tax was up. Initial allowances were suppressed completely. Entertainments tax was up on cinemas and racing. The National Health Service charges were introduced for the first time. [HON. MEMBERS: "Why?'] Why—because the Labour Government had made such a mess of it.
What followed that "inspired" Budget? Six months later the country was in a state of collapse; and so were the Government. Unable to face the consequences, what did they do? They did what Socialists always do when they get into difficulty—they ran away from it. It was at first an instinct; now it is a tradition.
So, five years after the "Red Flag" was sung so resolutely in these walls and the Tory Party was confidently condemned to opposition for a generation, the Socialist Government, in spite of the inspiration of that Budget, advised a Dissolution in the confident hope that the electors would get rid of them. It was a narrow squeak, but it was just all right. How they must have sighed with relief when the second day's returns came in.
If those are the political and economic consequences of what the Leader of the Opposition calls inspiration, I am content to avoid those dizzy heights and keep plodding along my flat, prosaic path to prosperity.
At this point it would perhaps be convenient, and would serve like a sorbet at an old-fashioned banquet to lower the temperature of the debate, if I were to leave more general topics and come to a more specific one. A good deal has been said on both sides of the Committee on the subject of tax evasion and avoidance. I do not at all complain of that. Indeed, the great prominence given to that matter at so early a stage in our prolonged proceedings shows how thin and unreal is any attack on the Budget as a whole. Those matters are more usually left to the more technical proceedings on the Finance Bill.
Tax evasion, as I understand it, means dodging tax, either by fake declarations or fake returns or some other illegal method. When discovered it is punishable, and it is severely punished. In that field, the Inland Revenue does a very good job. I do not believe that there is any country in the world where tax evasion is so effectively sought out and dealt with by a body of extremely expert, loyal and incorruptible officers.
Tax avoidance, on the other hand, means, I take it, no breach of the law. It means so arranging matters as to attract the minimum possible taxation within the law. I do not say that all transactions which lead to a reduction of tax liability are necessarily blameworthy. Many of them are well within the spirit as well as the letter of the law, but there are devices which are obviously designed to produce results quite contrary to Parliament's intentions and, therefore, outside the spirit though just within the letter.
The Government and their predecessors, like all Governments in my time, have played their part, on the advice of their most able and devoted counsellors, in stopping those leaks where they are revealed. I rather resent the accusation that we have been remiss in this. It is just not true. As hon. Members know to their cost, almost every Finance Bill contains long and complicated Clauses for that very purpose.
In 1953, the use of overdrafts to avoid tax on remittances of overseas income was stopped. In 1954, the avoidance of tax by the reconstruction of companies was stopped. In 1955 what is called "dividend stripping" was stopped. Those are just examples. In the current Finance Bill—

Mr. Harold Wilson: Twelve months' delay.

Mr. Macmillan: It must be done once, every twelve months. It is no use talking about twelve months' delay; it must be done in the regular Finance Bill.

Mr. Wilson: If the right hon. Gentleman will study the debates on the autumn Finance Bill last year, he will find evidence which we on this side of the Committee produced to show that this was well known to the then Chancellor


many months before but the then Chancellor failed to deal with it in the normal April Budget because he was running an Election Budget at that time.

Mr. Macmillan: That is a very feeble point, and quite unworthy of the right hon. Gentleman. Everybody knows that that was a shortened Budget because there was to be an Election. The hon. Gentleman also knows that the Finance Bill can only run a certain period and there is no more than a certain amount that one can put in one Finance Bill.
As I was about to say, in the current Finance Bill, I propose to deal with two recently revealed defects in the Profits Tax law. We have certainly nothing to regret in our record. We shall continue to deal with the legalistic trickery of these avoidance devices by every means in our power.
The right hon. Member for Huyton made great play with a circular advertising methods of avoidance. No doubt he saw also the immediate repudiation of such methods by the President of the Institute of Chartered Accountants as being contrary to proper professional conduct. The closest watch is kept by the Inland Revenue on the emergence of new methods of avoidance, and whatever action is called for will be taken.
Now I come to the question of the £100 million in Government expenditure which we hope to save, and which I announced in the Budget speech. Right hon. and hon. Gentlemen opposite have made reference to this. First, there was a technical point raised by the hon. Member for Kilmarnock (Mr. Ross). I do not know whether he is in his place.

Mr. Ross: Do not worry; he is here.

Mr. Macmillan: The hon. Gentleman referred to the debates that we are to have this week and in future weeks, and asked whether it would not be odd to ask the Committee of Supply to debate Estimates which might be changed. But, of course, our debates this week are on moving Mr. Speaker out of the Chair, so that point does not apply. In any case, Supply Votes are now kept open as a general rule until the end of the Session, so that the Committee can return to any particular subject as desired. Therefore, there is no great validity in his point, although I take note of it.

Mr. Ross: There is a further point. We have a Select Committee on Estimates in this House which investigates specific subjects. The officers of the various Departments will have to appear before that Committee and defend those Estimates as they are presented. Surely, in fairness to that Committee as well as to the House, we should know what changes are to be made.

Mr. Macmillan: I do not think that there will be difficulty if it is found that savings can be made. I have replied to the point made by the hon. Gentleman.
On the general issue, which is a wider one, I will explain precisely what we have in mind. There will undoubtedly have to be this year, as always, additional expenditure which will be unavoidable but which at present is unforeseen. On the other hand, there will be underspendings which equally we cannot foresee now. These will, so to speak, be accidental rather than deliberately planned. My announcement left both these—the new services and the underspendings—on one side. They will happen, as they always happen, in the normal way. I repeat that our intention is to make reductions amounting to £100 million in the services provided for in the Estimates as published. Savings of that magnitude may well require important changes of policy or in administration or both. When such changes are decided on, they will be announced to the House.
It may be asked why this new announcement was left until after the Estimates had been published in the ordinary way. It is really quite simple. One must not weary of well-doing. The measures which I announced in February were mainly on capital account, though not all. There was not time for any further review of current expenditure beyond that made in the ordinary way last autumn.
So, when I came to consider the Budget, I found that if we are to get the effects which I am seeking in the large surplus and all the rest, I had this choice: either to impose yet another large increase of taxation—perhaps of the order of £100 million—or somehow to get a similar total off Government expenditure. I hope that the Committee will feel that I have made the wiser choice.
It will not be easy, of course, but in my experience it is made much easier by


fixing a definite sum. These promises, or targets as they used to be called, are of course hostages to fortune. They can be very inconvenient, but they can also be very helpful. I have found it so in recent years in relation to various collective undertakings entered into by the leaders of my party. At all events, for my new task my various changes of office—for which I have to thank the Prime Minister—have one great advantage. I have for so long been a poacher over so many heats that, now I have turned keeper, I know some of the tricks.
Now I come to the Budget proposals for personal savings. I called my Budget a savings Budget and I believe I was justified in that claim for, taken together, it is a rather good savings "package". It is true that the public attention has fastened on the Premium Bonds. That was natural and unavoidable, for it was a novel proposal. I shall have something to say about it in a moment.
However, I ask the Committee not to get it out of perspective. That is the last thing that I or the National Savings movement would wish to happen. Lord Mackintosh pointed out, at a meeting of the National Savings Committee which was held on the day after the Budget, that the movement was a great national organisation catering for the whole country, and that it now had something for all tastes and all purses. He hoped that everyone would now come into the movement through the avenue which best suited his inclinations. Those were Lord Mackintosh's words; they were very wise words from a very wise, high-principled and patriotic man to whom the nation owes a great debt.
For, indeed, quite apart from the Premium Bonds, and long before they will be available, I have given the movement a splendid line of goods to sell. The National Savings Committee was particularly pleased with the Income Tax concession. It felt, and I am sure it is right, that this would induce many old savers to raise their holdings to the maximum to obtain the concession, and would bring in many new depositors. The new Savings Certificate and the new Defence Bond are called by Lord Mackintosh the best tools for the job that they have had in the forty years of their history. So much for the savings.
In the same way, the building societies have given a hearty welcome to the relief of Stamp Duty on house purchase. It is a wonderful thing that, whereas five or six years ago, there were fewer than 20,000 houses a year built for the owner-occupier, there will be built this year about 130,000. We have 5 million owner-occupiers in this country, and the more there are the better.
Then there is the retirement provision for the self-employed, and a number of concessions and changes in that field of taxation. I am confident that that marks a really important change, almost a revolutionary change. It covers a very wide range of people in all walks of life. The more advantage is taken of it the worse for the Revenue in a narrow sense but the better for the nation.
Finally, there is the Premium Bond. I certainly do not wish to complain of the criticisms, or at least of the criticisms which are put forward sincerely—we have heard several in the Committee and outside—from conscientious motives. I have far too much respect for the very deep feelings which are held in some quarters not to be impressed by what is said, but I must admit that I find the attitude of the official Opposition somewhat distasteful. After all, it was a Socialist Chancellor who was responsible for the Exchequer first cashing in on gambling—and that was real gambling, where the stake is forfeit if no prize is won. It was the Budget of 1947, about which we have heard so many agreeable things tonight, that first made the State a partner in the football pools—and to good purpose. About £21 million is the yield today.
I do not, of course, know how the bonds will be received by the public. Until we try we cannot tell. As my right hon. Friend the Financial Secretary observed with his usual good sense, if it does not sell it will have to be dropped. I have known that to happen to me in my business life—if a thing does not sell, one gives it up—but I think the bonds will sell. We shall certainly persevere with the experiment, and I feel confident of its success.
While we respect the views of those who oppose it, we feel with equal sincerity—we are equally sincere, and I am sure that the others will respect our views—that there is all the difference in the world between a system of gambling, under


which the punter loses his stake unless he wins, and a system of saving where the saver's money is held absolutely safe and the element of chance is confined to the prizes.
It is for that reason that we must have a proper system of registration so that the bonds are treated exactly like other bonds which are issued by the Government. We shall give the people an opportunity of deciding. I know that is a very distasteful idea to hon. Members opposite, but we are going to do it. Remember that no one has to buy these bonds who dislikes them; there is all this other great package of saving securities available. For this reason, it seems most unlikely to me that the National Savings movement will wish to use the bonds in their schools savings campaign. Meanwhile, as to whether the State partnership in the football pools is a squalid raffle or not, I must leave that to be fought out between Huyton and Bishop Auckland.
I ought perhaps to say a word about our funding policy. In the widest sense, there are many forms of funding measures in the Budget proposals. They include, of course, the new small savings securities. The more of these the movement can sell, the more successful our funding will be.
But then there is the market. Here, it is essential to make prompt use of market opportunities. The 5 per cent. Exchequer stock, 1957, offered on 7th March, was intended as an example of that. It was intended to meet the preference and needs of the short-term lender. Now we have the next step, the issue of the £250 million of 3½ per cent. stock, to meet the requirements of the long-term lender. What I want to show is that that is a very good example of what we can do by funding in our own hands, by issuing stocks of different kinds, which is not open to the present method of funding for the nationalised industries.
In effect, I think that it would be admitted that the attack on the Budget has really fizzled out. So, in this situation, hon. and right hon. Gentlemen opposite have tried to go elsewhere for some much needed honey. They have tried to find it in the economic record of the past few years. I am rather surprised at this.

Mr. Dalton: Before they get left behind, surely the right hon. Gentleman is going to answer the questions about the tobacco tokens and the proportion that would be lost of the £28 million of new revenue, is he not?

Mr. Macmillan: That is a wider question which I will debate when we come to the discussion on the Finance Bill. As the right hon. Gentleman said, "It is all open". I do not propose to enter into these details at the moment. I think that it would be better to leave it to the Finance Bill debates. Hon. Members opposite have made very little of it in the course of four days' debate, and I have sat through practically the whole of it.
I was saying, when the right hon. Gentleman intervened, that I was rather surprised at this. This is supposed to be a debate both on the Budget and the Economic Survey. When I said in my Budget speech that I did not wish to waste too much time in analysing the past, which seemed to excite some amusement on the other side of the Committee, it was certainly not due to timidity about our record; it was merely due to charity towards hon. Gentlemen opposite. Some Opposition speakers have tried to make reproaches or criticisms against the Lord Privy Seal. They were never very precise. But I should like to ask some questions in return.
What are the accusations against my right hon. Friend? What is the crime of which he is charged? What is the terrible injury to the State which is to be written, as was "Calais", on Queen Mary's heart? I will tell the Opposition. He reduced the Income Tax. But so did the right hon. Member for Bishop Auckland, and no one seemed to mind very much then. The only trouble, of course, was that his successors conducted their affairs so badly that they had to put half of it back again. Of course, that is their idea of planning. But then they say—worse still—my right hon. Friend not only did it once he did it twice. He did it half way through a Parliament and at the end of a Parliament. Is it not terrible?

Hon. Members: What about the Election?

Mr. Macmillan: We will come to the Election, I have a lot to say about that.
My right hon. Friend actually relieved the British people of taxation during his period of office to such a degree that if taxes had remained at the rate at which he took them over they would have amounted to another £800 million a year. But he did something worse than that, something of which he really ought to be ashamed. Not only when he was Chancellor did he take a 1s. off the Income Tax, but he took millions of people out of the range of Income Tax altogether. How disgraceful! Whom did he take out? The rich? No—the poor. He raised the minimum income chargeable to Income Tax from £135 a year to £180 a year. When he came to office, under that great régime that looked after the ordinary working man so well, a married man with two children who earned £11 a week had been paying £27 10s. a year in tax. When he left office, the same man paid nothing at all.
Of course, there was one trap into which my right hon. Friend did fall. As the area relieved grew wider and wider, there were each year some who did not benefit at all. As the Prime Minister of the day observed, it is difficult to find a way to relieve from tax a man who is not paying it. There are other crimes against him—I have not finished the catalogue. Look what he did to the social services. He found expenditure on the National Health Service at £400 million; he left it at £463 million; he found expenditure on education at £251 million; he left it at £343 million. That, I suppose, is called slashing the social services.
On housing, I worked with my right hon. Friend all those years, and if it had not been for his constant support we could never have got or exceeded 300,000. During that time he had to support a defence budget which grew from £1,100 million to £1,500 million. Do not let us hear any more about the Korean war. He came into office at a period when the economy was broken and the country approaching financial disaster. After four years he brought the greatest prosperity and happiness that the country had ever enjoyed.
"Ah," Members opposite say, "but it was not the first 6d. that rankled so much. It was the second, which came just before the Election." What did the Opposition do about that? I did not hear the heavy trampling of their boots going through the Lobbies. [Laughter.]

Not at all. They asked that the 6d. should be extended to cover a greater range. What were the proposals of the Opposition's leaders this time last year, when they knew that the Election was pending?
Their accusation now is that the Chancellor should not have taken the risk of making available additional purchasing power at that time, even as an incentive to production. We have heard it all through the four days' Budget debate. They, with their superior wisdom, foresaw the pressure on the economy. They, with their trained foresight, saw the cloud on the horizon. What did they do? They did not vote against Income Tax. That was their first splendid gesture of defiance. They could not move other concessions. That would have been out of order, or no doubt they would have moved them. The Leader of the Opposition complained that there was nothing off beer, nothing off tobacco, nothing off petrol.
When we came to the Election, what did they do? I have to be a little careful, because the record is very confusing. There were, I understand, two editions of the Labour programme. One was what I might call the library edition, published the year before, and called "Challenge to Britain". That made a series of proposals which are difficult to calculate, but which could not be bought at anything less than £1,500 million a year extra expenditure. Not even Professor Balogh has got it lower than that.
That frightened some of them, and so later a popular edition was brought in where the prices were brought down a bit. Even so, the Election programme budget of the party opposite would have added many millions of purchasing power. Now these stern moralists, these economic puritans, come along and reprove my right hon. Friend with an air of righteous self-satisfaction. All I can say is that this is the greatest humbug in the world.
That is not to deny that in the ten years since the war Britain has had to meet an economic position of considerable difficulty. This afternoon the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) called our special attention to that. It is always interesting to listen to the


hon. Member. I am not saying that as a nation we have not made mistakes, perhaps in both directions. First, we were too constrained and then perhaps we have moved too rapidly to freedom. But all the same we have achieved a good deal, and I do not think that we should under-rate our achievements.
Our gross investment—and gross and not net investment is the fair figure for a highly industrialised country, because the gross investment figure includes the replacement of obsolescent assets—has, as a proportion of gross national product, risen under every Government of both parties every year since the war. In 1946 it was 10·3 per cent.; in 1951 it was 14·5; and it was 16·7 in 1955. I have no doubt that it will be higher again this year. And all this time we have carried a heavy burden of armaments and many commitments overseas.

Mr. Ellis Smith: But it has not been planned investment.

Mr. Macmillan: I say that whatever Government have been in power, whether of the Left or of the Right, have had much the same experience.
Let us be frank; none of us has yet devised the perfect mechanism for foretelling economic pressures with any degree of precision. Nor have we perfected all the necessary instruments for guiding ourselves through a patch of dirty weather. Unless we are to adopt a hopelessly doctrinaire point of view, we must, so to speak, learn as we go. We must feel our way, by trial and error, and I think it important that the facts should be set out as objectively as possible for the people to understand. Each successive Government has tried, in the White Papers and Economic Surveys, to do something of the kind.
Today, we are struggling against inflation. It may be that in a few years' time the struggle will be the other way round, and then we shall have to try to apply the appropriate remedies. But now it is inflation, which means really that we, as a whole people, are trying to get out of the system more than we put into it. The only way to overcome that, until we can put more in, is to take less out. That is why increased taxation, reductions in subsidies, etc., are necessary. That is why we need public saving,

by a large Budget surplus, as well as by all possible means to stimulate private saving. If costs rise faster than production, prices must rise too. If we pay ourselves more for producing the same number of things, the extra money must be spent somewhere. Of course, it goes into too many imports and holds back too much from the export market.
The purpose of both parties is to maintain full employment but, of course, full employment puts both sides of industry, masters as well as men, in a very strong position in relation to the public. That is the problem. The recent White Paper has been much criticised from the Right and from the Left. Some critics say that prices could not rise at all, if the Government adopted a correct—and by that they mean a savage—monetary policy. Of course, that is true. At some level of monetary restriction prices could not rise. But then we should have stability at the cost of unemployment.
Others say that if only the Government would stop prices rising, by lowering prices, by subsidies and by all kinds of intervention, then wages would not rise. I think that that line is just as partial as the other; for in a full employment situation such measures must increase the pressure of monetary demand, and all experience shows that in that situation restraint does not have a chance. There are too many people—even though they represent only a small minority—who would take advantage of the situation. Then, of course, other people feel that since some are getting away with it, they have to follow.
We hope that full employment has come to stay. It has brought great benefits, but it has also brought some new problems, and we shall not solve them unless we make a genuine effort to understand what they are. Nevertheless, in all these affairs, I hope that we shall keep a due sense of proportion. I was told that I must not be an optimist; I do not think that I ought either to be a pessimist. We must try to keep a sense of balance.
The Economist gave a figure the other day which struck me as very remarkable. It said that the deficit of £103 million on the balance of payments means that, on a total national income of £16,000 million or more, the British people have


overspent at the rate of 2d. in the £. Moreover, a large part of this deterioration, as I said in my Budget statement, was due to temporary factors—the losses on shipping as the result of the dock strike and the very large expenditure—once-for-all expenditure—necessary to restart the oil operations at Abadan. That figure of 2d. in the £ on £16,000 million shows how really marginal our problem is.
Surely, therefore, these problems are matters within our grasp. They are not the result of an inherent weakness, but perhaps they are the result of the difficulty of devising precisely the right techniques for modern conditions. While I personally—and I know that hon. and right hon. Gentlemen opposite will forgive, me, because they know our views—am opposed to the over-regulation which I think goes with Socialism, I am equally convinced that, in this second half of the twentieth century, we cannot revert to the laissez-faire of a hundred years ago. That certainly never was Tory doctrine, and I do not think that today it is Liberal doctrine.
What we have to find, surely, is the proper balance between excessive freedom and excessive regulation. In a modern society, the Government must have the broad strategic direction of the economy. One thing we have surely learned is the folly of trying to take control of individual industries. Socialists no longer believe in nationalisation, at least, not with the same pure faith as in the old days, and they certainly cannot claim that the nationalised industries have done anything but add to our problems. [HON. MEMBERS: "Oh."] I mean our financial problems.
We must find out by trial and error the right amount of guidance and management to be exercised by the central Government; and, if I may use an expression which I have ventured to use before, I feel that the Government must be like the commander-in-chief in a campaign. He must plan the broad strategy of the campaign, but if he tries to take control of the divisions, brigades and battalions, then he is lost. It is the search for that course and that policy, in which both sides must act together, and certainly this side of the Committee, that we are determined to pursue. We must build upon sound foundations, and I

claim that this Budget is a foundation upon which such a policy can be built.

Question put and agreed to.

Resolution to be reported Tomorrow.

Report to be received Tomorrow.

Committee to sit again Tomorrow.

FINANCE [EXCHEQUER ADVANCES]

Considered in Committee under Standing Order No. 84 (Money Committees).—[Queen's Recommendation signified.]

Resolved,
That, for the purposes of any Act of the present Session relating to Finance, it is expedient to authorise—

(a) the issue out of the Consolidated Fund of such sums as may be required for the purpose of making to bodies concerned with the carrying on of industries or undertakings under national ownership or control advances not exceeding the sum of seven hundred million pounds;
(b) the raising by the Treasury in any manner in which they are authorised to raise money under the National Loans Act, 1939, and the payment into the Exchequer, of any money needed for providing the sums authorised to be issued under the foregoing paragraph, or for repaying to the Consolidated Fund all or any part of the sums so issued;
(c) the repayment into the Exchequer, with interest, of any sums authorised to be issued under this Resolution and their re-issue out of the Consolidated Fund and application in redemption or repayment of debt or, in so far as they represent interest, towards meeting such part of the annual charges for the national debt as represents interest.—[Mr. H. Macmillan.]

Resolution to be reported Tomorrow.

FINANCE [NATIONAL LOANS]

Considered in Committee under Standing Order No. 84 (Money Committees).—[Queen's Recommendation signified.]

Resolved,
That, if the terms of issue of any securities issued under the National Loans Act. 1939, provide for the making of payments in respect of those securities other than payments of principal and interest, the sums required to meet those payments shall be charged on and issued out of the Consolidated Fund.—[Mr. H. Macmillan.]

Resolution to be reported Tomorrow.

UNDERGROUND WORKS (LONDON) BILL

Sir Albert Braithwaite, Sir Thomas Dugdale, Mr. Gibson and Mr. Anthony Greenwood nominated Members of the Select Committee.—[Mr. T. G. D. Galbraith.]

Orders of the Day — NATIONAL ASSISTANCE (DEFERRED EARNINGS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]

10.2 p.m.

Mr. David Griffiths: I am raising this debate on the Adjournment because of the reply I received from the Minister of Pensions and National Insurance on 26th March, namely, that when a person resumes work after a period of unemployment or sickness he has to work a fortnight before he receives any remuneration, particularly in industries which keep a week's wages in hand.
Under the Act of 1948, and previous Acts, we have remedied the ill effects and removed the taint of the old Poor Law, but I am still concerned with the method which is being applied by the National Assistance Board when a man resumes work in these circumstances. The Board gives the man a note to take to his employer to receive an amount of money on loan to tide him over until he receives his week's wages. In other words, he has a fortnight's wait before he receives any money. A fully capable man is not entitled to assistance, but he can get it for his wife and family.
I ask the Minister to reconsider this matter. I am worried about our lower-paid men. Much more consideration ought to be given to this matter than is being given at the moment. When replying to my Question, the Minister said:
The arrangement which the hon. Member has in mind operates only in cases where the men concerned have wages already due to them. No question of a loan therefore arises."—[OFFICIAL REPORT, 26th March, 1956; Vol. 550, c. 1754.]
That is a contradiction in terms. He has to wait a fortnight for his wages, and they are not wages until he receives them.
A man on low wages may have been out of employment through sickness or infirmity for a considerable time, and at the very time he wants extra nourishment he has to go to his employer for a loan of £3 and then has £3 deducted from his first week's wages. His National Assistance ceases immediately he starts work and he has about £3 to carry him over the first week and until he draws wages on the second Friday after commencing work. That applies in the majority of cases where men are employed on a week-to-week basis and wages are kept a week in hand. It means that a man on a low rate of wages works for two weeks for little more, if any more, than he had been getting from National Assistance.
I accept that this is a very old and difficult problem. It still has the taint of pauperism. The Minister may say that this arises under an Act of the Labour Government, but I respectfully suggest that if we made a mistake it is up to the Minister to rectify the anomaly when he sees it. This is an injustice which could be put right by the Minister and the Assistance Board through regulations, and I beg the Parliamentary Secretary to ask her right hon. Friend to reconsider the matter and allow it to be investigated.
I realise that many men are getting good wages and I am not appealing for them, but I submit that for ordinary labourers working for local authorities, or agricultural workers or colliery surface workers, all on a very low rate of wages, it is unreasonable to expect them to maintain themselves for two weeks on one week's wages. I hope that the Minister will reconsider the question.

10.8 p.m.

Mr. J. K. Vaughan-Morgan: The hon. Member for Rother Valley (Mr. D. Griffiths) has raised this difficult matter in a very restrained manner and I will certainly endeavour to follow that manner, although I take entirely the opposite view—a point of view which, I think, is equally reasonable.
This is a long-standing difficulty in industry. In a way, I speak from the other side of industry. The custom has grown up, now that wage calculations are so complicated, that a week's wages are held in hand to the end of the second week of a man's employment. That is inevitable


with complicated wage rates and the various calculations which are necessary. But the fact still remains that the wages which are kept in hand are that man's own money. It may be that by agreement it is necessary to hold it back for a week so that when his employment eventually ceases he has two weeks' wages to draw, but I still maintain that when a man has been employed for a week it is wrong that he should be forced to go to National Assistance instead of receiving from his employer a substantial sum in subvention of what is his own money.

Mr. D. Griffiths: Do I take it that the hon. Member agrees that the man should be penalised in the first fortnight? It is true that a week's wages are kept in hand, but on this basis the man has to wait a fortnight. He is, therefore, suffering an injury at the commencement of illness and inconvenience when he begins work.

Mr. Vaughan-Morgan: I see the point that the hon. Member has in mind, but the principle is still the same. What matters is that the lower the wage, the higher the proportion the man ought to be able to receive in subvention, so that the sooner he can be taken off Assistance the better.
I hope that when my hon. Friend replies, she might be able to give facts and figures as to the amount involved. I looked into this question some years ago and was astonished at the amount of money which was being spent on Assistance, in my view wrongly and unnecessarily, because there are still—more shame for them—some employers who are not prepared to hand out to a man at the end of his first week's work what I call his own money.

10.11 p.m.

The Joint Parliamentary Secretary to the Ministry of Pensions and National insurance (Miss Edith Pitt): As the hon. Member for Rother Valley (Mr. D. Griffiths) said, this is not a new problem. It has been going on for some years. I should not mind a shilling for every note I have signed authorising a man to draw a "sub" on the week's wages held in hand for him. It is, however, an advance on wages due to him. That is the first point that we ought to get quite clear.
The hon. Member has referred again tonight to a loan, as he did when my right hon. Friend replied to his Question on

26th March, but it is not a loan. When a man has done a week's work, and his employers hold a week's wages in hand, the money is that man's due. The "sub" that he asks for is against pay which is due to him. We ought to be quite clear that we are not talking in terms of a loan from the employer.

Mr. D. Griffiths: The hon. Lady is splitting hairs. What is the difference between a loan and a "sub"? Is the "sub" not a loan?

Miss Pitt: No. A "sub" is a subvention against money due, and the man concerned is entitled to that money.
As my hon. Friend the Member for Reigate (Mr. Vaughan-Morgan) has just said, when a man leaves work, if he has been working for a firm which holds a week's wages in hand, he will have two weeks' money to come. To pursue it to its logical conclusion, when the man eventually retires from work, he has two weeks' pay to come—despite the fact that he gets his retirement pension at once. It cannot, therefore, be described as anything other than an asset, an amount of money in hand, to which the man is rightly entitled, and upon which he draws by way of subvention when he resumes work.

Mr. Griffiths: The hon. Lady is mentioning an entirely different case. The person who will draw an old-age pension applies for it months ahead. The man of whom I was speaking, who is either unemployed or sick, is in an entirely different category.

Miss Pitt: The hon. Member, I think, is still not clear about the point I am making. Money in hand can never be described as other than money in hand. Whether a man draws it at the end of his first week's work, or goes on working for another forty years until he draws retirement pension, it is still his money. Eventually, he will receive the whole of it. The employer has no claim to it. When the man himself asks for a "sub," he knows that he is claiming against money due to him. We should not talk about a loan, but about an advance on wages due.
The hon. Member is concerned about the necessity for National Assistance at the end of the first week in which a man starts work after sickness, unemployment or strike action. In industry, it is fairly


common for employers, particularly large employers, to hold a week's wages in hand. For this reason the wages earned in the first week are often not paid until the end of the second week.
It has always seemed wrong to the National Assistance Board that public funds should be expended solely because a man cannot get the money he has undoubtedly earned. This does not arise where payment of wages is made in the same week. Small employers can usually do that because it is administratively easier for them, as they have no big wage accounting machine. It does not arise where a man starts work with a firm which pays at the end of the same week. That is a point which we ought to bear in mind. So there is no question of calling upon public funds to help a man in such an instance, if he is drawing his money at the end of the first week.
Even allowing for all the complications of modern wage accounting, to which my hon. Friend the Member for Reigate referred, the Board has not been able to see why an employer who follows the practice of paying wages in arrears, should not be ready, when necessary, to make advances against wages already earned.
Briefly, that is the history of this situation. The Board first expressed concern publicly about this matter in its annual Report for 1949. The Comptroller and Auditor General also drew attention to it in his Report on the Board's Appropriation Account for 1952, and there have been other criticisms about the amounts paid in that way. In 1952, the then Minister of Labour and National Service agreed to the position being discussed by his National Joint Advisory Council, which comprises representatives of employers and trade unions. The Council supported the view of the Board, that the solution lay in persuading employers to make advances in appropriate cases, and it agreed to the British Employers' Confederation advising its constituent bodies to do so. Since then, I am glad to say, there has been an increasing readiness on the part of employers to make such advances.
It is my own experience—I have had some experience as a factory welfare officer in Birmingham—that most

employers are willing to give a "sub" when a man genuinely wants it. It is quite often discussed—this is my personal experience when a man is signed on at work. He asks the question, "What shall I do at the end of a week?" or the employer makes a statement saying that he will keep the money in hand. Then it is immediately agreed, usually on the Monday morning when the man begins work, that if he calls at the personnel department on the Friday he can have a "sub" against wages due to him at the end of the first week's work.
I know that many employers had such a system in operation long before the official approach was made in 1952. The extent to which it has grown since is shown by these figures, which, I hope, will answer the point made by my hon. Friend. A count taken in a week in November last showed that 2,900 payments of Assistance were being made in these circumstances at a cost of £6,700. That compares with nearly 7,000 payments at a cost of £10,000 in a week of 1949.
I want to make quite clear the fact that the Board and its officers always endeavour to be reasonable in the application of this system. An advance is never suggested except against wages actually earned. The Board's officers know that the man has money due to him. To remove any difficulties about asking for a "sub," the Board's own officers usually take the initiative in approaching employers to make such an arrangement where it is known not to exist. Where it does exist, there is no need for the Board's officers continually to get in touch with a particular firm. If, in fact, they find a firm not issuing "subs," they make the approach themselves, thus relieving the man of any difficulty.
If it is argued that hardship may be caused in the second week by not having a full week's pay—and I think that that is part of the argument the hon. Member has advanced—I would say that that is not often the case in these days of very high wages. In any event, many employers spread the adjustment over two weeks or more. I am referring here to "subs", that being the regular expression, though "subventions" is, I suppose, the proper word. As I say, the "sub" does not have to be deducted from the


end of the second week's pay packet; quite often the adjustment is spread over two or more weeks. Certainly, from my own experience, the usual period in the company for whom I used to work was four weeks. That was fairly general in the Midlands. Surely that removes any suggestion of hardship where the wage packet is not very high.
If the hon. Member for Rother Valley knows of any case where the payment for the second week is so small that the man would be worse off than when drawing National Assistance, as I remember he suggested in his supplementary question on 26th March, perhaps he would let my right hon. Friend have the details so that the Board can look into it. That applies equally to any other case where hardship may be caused by this procedure, although in fact it is believed to be working well. I think it is not unfair to suggest that a man should seek advances on his wages in this way.
Since the hon. Member referred to an anomaly, I think that here is one, and an occasion where unfairness could arise. A man who starts work with a firm which pays at the end of the first week has no title to National Assistance. He would not even apply for it. Yet, compared with a man who draws National Assistance after his first week at work because his firm keeps a week's wages in hand, he is less well off. The latter is, in effect, drawing two payments. I think we should be quite clear on that, because that is where an anomaly and a certain unfairness could arise between one workman and another.
We ought also to remember that National Assistance is public money which is generally not recoverable. There are always those, fortunately a minority—and I expect the hon. Member is in accord with me here—who try to claim on public funds rather than help themselves.

Mr. D. Griffiths: As a member of the old Board of Guardians, I know.

Miss Pitt: That is my own experience. I am sorry to say that it applies especially to immigrants from various countries. They come to the personnel department at the end of the first week and ask for a note to the Assistance Board so that they may be given a grant. It is explained to

them—I have often done it myself—that there is no need for that. They are reminded that when they started they were told that the firm was perfectly willing to give them a "sub" against the week's wages held in hand. That would carry them on and pay their lodging money and other expenses until they drew their full pay. But the answer comes, "Oh, no; the 'sub' has to be repayed, but National Assistance is a grant". Some people who come to this country are extremely well versed in the operation of our social services. They give no thought to the fact that it is their mates—the men they work alongside—who contribute through taxation to the maintenance of these public funds. Indeed, that is, I suggest, a point which we all ought to have in mind.
It is my experience also that the majority of workmen prefer to stand on their own feet. If they cannot manage on what they have in hand, they would rather claim what is rightly theirs, by means of a "sub" from employers on wages in hand than go on National Assistance. In fact, it does not occur to them to claim National Assistance, though I am sure that they would not grudge it to those really in need.
I repeat that the Assistance Board believes, and I believe, that the principle that workmen should draw on wages which they have earned, rather than on public funds, commends itself to public opinion. But the Board wants to emphasise that it does not apply this principle rigidly or lay down hard-and-fast rules. Where, for any reason, an advance cannot be made of a sufficient amount to meet a man's needs, or where his wages are not likely to be substantially in excess of his needs by Assistance standards—and this I think would take care of the lower-paid men who are the concern of the hon. Member for Rother Valley—Assistance would not be refused.
The Board endeavours to be reasonable, and to administer fairly the public funds for which it is responsible. The figures quoted earlier show the success it has achieved and answer criticism from two entirely opposed points of view. The fact that there has been a reduction from 7,000 payments a week in 1949 to 2,900 a week in November last year—a quite considerable reduction—should answer those who say that there should be no payments in


these circumstances and that money is disbursed too easily.
Equally, I believe, the same figure of 2,900 payments still being made should remove any doubt that real hardship is not being met. I think that the Board administers this matter with common sense. If the hon. Member for Rother Valley knows of cases where he feels hardship is caused, my right hon. Friend

or I would be very glad to look into them for him, but I believe that both the hon. Member, and my right hon. Friend the Member for Reigate will agree that the Board is endeavouring to be reasonable and fair in this matter.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes past Ten o'clock.